Law:

Section:

Section 32, read with sections 72 and 139 of the Income-tax Act, 1961 [Corresponding to Section 10(2)(vi) and (vib), read with sections 22(2A), 22(3) and 24(2) of the Indian Income-tax Act, 1922] - Depreciation-unabsorved depreciation - Assessment year 1957-58 - Whether allowance for depreciation under section 10(2)(vi) of Act 1922 will follow and not precede set off permissible under section 24(2) of Act 1922 - Held, yes - Whether if depreciation did not fall within ambit of section 24(2) of the Act 1922 it is obvious that set off of carried-forward unabsorbed depreciation will not depend upon compliance of section 22(2A) of the Act 1922 - Held, yes FACTS The petitioner, company, for the assessment year 1957-58 submitted a return on 12-3-1959. Actually, it made a trading profit of Rs. 64,131 for that year. But it claimed Rs. 56,280 as depreciation allowance and Rs. 1,34,317 as development rebate so that its return showed a loss. The ITO by an order, considered the return as null and void on the view that it was not filed within the assessment year and that in view of the provisions of section 22(2A) of the Act, 1922, which according to him applied to the case, the loss returned by the return of the petitioner would have to be ignored and not to be carried forward. On writ petition:- HELD In case of CIT v. Speed-a-way (P.) Limited [1967] 65 ITR 351 it was held that the scheme of carrying forward of unabsorbed depreciation and set-off envisaged by proviso (b ) stands by itself and is independent of section 24(2), which has nothing to do with that item of allowance and contains only a rule of priority. Proviso (b) to clause (vi) of section 10(2) was, broadly speaking, to the effect that unabsorbed depreciation of the previous year shall be carried forward to the subsequent year and be deemed to be part of similar depreciation of such subsequent year and so on for succeeding years and set-off thereof allowed on that basis. Section 24(2) did not concern itself with depreciation allowance except that proviso (b) to clause (iii) directs that where such allowance was to be granted, effect shall first be given to sub-section (2). In other words, the allowance for…

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