Law: Income Tax Act, 1961

Section: 256

Income-tax--Reference---Carry forward and set off---Tribunal finding that the business of the assessee was a composite one and mere discontinuance of an activity will not disentitle assessee to the benefit of carry forward and set off of unabsorbed losses and depreciation against other income---Tribunals decision not erroneous---Indian Income Tax Act, 1961, S.256(2). Where the Tribunal held that the business of the assessee was a composite one and if out of that composite business, the hotel business was sold, it would not disentitle the assessee to the benefit of carry forward and set off of business losses and depreciation of the hotel business against other income: Held, that the order of the Tribunal was justified and no question of law arose. JUDGMENT V. V. KAMAT, J.---This is a petition under section 256(2) of the Income Tax Act, 1961, praying for a reference of the following two questions: "(1) Whether, on the facts and in the circumstances of the case--- (a) the Tribunal is right in law and fact, in characterising/finding the sale of Eastern Tourist Home--a hotel business--as a mere discontinuance of an activity and is not such a finding wrong, unreasonable, also unwarranted so long as the businesses are not one and the same? (b) the assessee is entitled to the benefits of carry forward and set off of unabsorbed losses and depreciation of hotel business against the other income of the assessee? (2) Whether, on the facts and in the circumstances of the case and on an interpretation of section 155 of the Income-tax Act,--- (i) withdrawal of the benefit initially granted in the assessment is a debatable issue and is not such a finding wrong, unreasonable and also unwarranted? (ii) the Tribunal is right in law in importing section 154 in its entirety or all the ingredients thereof while considering the scope of section 155 of the Income-tax Act in this case? (iii) the Tribunal is right in law in holding that the withdrawal of the benefit is not amenable to action under section 155 of the Act?" The assessment year is 1975-76. The original assessment was completed on February 18, 1978, when the share income from the firm, Janatha Medicals, was adopted as…

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