Law: Income Tax Act, 1922

Section: 2(15),10(2)(vi),23,24,30,33

Income-tax Act, 1922 -Sections 2(15), 10(2)(vi), 23, 24, 30, 33 ---- Appeal -Forum of appeal -Total income as reduced by unabsorbed depreciation below rupees two lakhs -Whether appeal lies direct to the Appellate Tribunal -Held no -- Computation of "total income" -Deduction for unabsorbed depreciation of previous years -Permissible only under section 10(2)(vi) -Deduction is "deemed to be part of that allowance" for purposes of computation of profit before such profit is included in total income -- Appeal -Business profits computed at about four lakh rupees -Deduction for unabsorbed depreciation of previous years -"Total income", after deduction, working out to less than two lakh rupees -Direct appeal to Appellate Tribunal, held, not competent -- ORDER {The order was passed by A. AHMAD Accountat Member}.---This is a direct appeal against the assessment for 1956-57. There is a preliminary objection as to the correct forum of appeal. In this case the Income-tax Officer in the first instance computed business profit at Rs. 3,99,806. He then proceeded to deduct unabsorbed depreciation of the two earlier years amounting to Rs. 2,12,757. After deduction of this amount "total income" was worked out at Rs. 1,87,009. The Departmental Representative contended that for the purposes of appeal the total income should be taken to be Rs. 1,87,039 and not the bigger figure of Rs. 3,99,806. The appellant's representative argued that Sections 30 and 33 were amended to facilitate disposal of bigger cases. The amendments created a right for bigger assessee's to prefer appeals direct to the Appellalte Tribunal. In the instant case the profit for the year in the appellant's opinion amounted to Rs. 3,99,806 and as such the correct forum of appeal was the Tribunal. It was submitted that deduction for unabsorbed depreciation was allowed under Section 24 and that computation of total income stood to be made under Section 23. In substance the appellant's representative made an effort to establish that deduction allowed which reduced the profits could not affect total income for purposes of direct appeals to the Tribunbal. 2. We have considred the arguments of both the sides. In our…

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