B.P.Jeevan Reddy, J. - (1.) Cardozo, J. had once exclaimed:"The precedents have turn upon us and they are engulfing and annihilating us, engulfing and annihilating the very devotees that worshiped at their shrine". We were inclined to repeat his observation after hearing this matter, a feeling which will be borne out and the judgment proceeds.
(2.) The matter arises under the Indian Income-tax Act. 1922 (hereinafter referred to as "1922 Act"). Of the six questions referred by the Tribunal for the opinion of the Madras High Court under S. 66(1) of the Act, only Questions 2,3 and 4 are relevant for our purpose. They read: 2. Whether, on the facts and in the circumstances of the case, the assessee was entitled to have the losses for the assessment years 1952-53 to 1954-55 quantified and set-off against its share income from the partnership firm of Dalmia Magnesite Corporation for the assessment Years 1960-61 and 1961-62 3. Whether the Appellate Tribunal has jurisdiction to direct the Income-tax Officer to quantify the losses for the assessment years 1952-53 to 1954-55 and allow the set-off against the share income from the partnership firm 1960-61 and 1961-62 4. Whether, on the facts and in the circumstances of the case, the assessee was entitled to have the losses of the assessment years 1955-56 to 1959-60 set-off against its share income from Dalmia Magnesite Corporation for the assessment years 1960-61 and 1961-62 under the provisions of S. 24 (2) (iii) of the Indian Income-tax Act. 1922
(3.) We shall state the facts insofar as they are relevant to the said questions alone. The respondent-assessee is a public limited company carrying on the business of mining Manganese Ore and selling it as such or after calcining it. During the Years 1945 to 1956, it claimed to have suffered losses in that business. On April 23,1956 the respondent-assessee filed its returns. for the first time, for the previous years relating inter alia to assessment years 1952-53 to 1954-55. The Income tax Officer issued a notice under S. 23 (2) and the matters were posted for hearing on May 7, 1956 but later the Income-tax Officer informed the assessee that on cognizance can be taken of the said returns as they had been filed beyond the period stipulated under S. 22 (1) and S. 22 (2A) of the Act. In respect of the assessment years 1955-56, 1956-57, 1957-58. 1958-59 and 1956-60, for which years the returns were filed in time. The Income-tax Officer found that the assessee had suffered losses and determined the same for each of the said years. For the assessment year 1960-61,the assessee filed. in the first instance. a return disclosing a profit of Rs. 1,00,136.00. but later filed a revised return showing a loss of Rs. 60,351.00 after bringing forward and setting off the losses of the earlier assessment years commencing from the assessment year 1950-51. The Income-tax Officer rejected the assessee's claim that it was entitled to bring forward and set-off the losses of the earlier years against the profits for the previous year relating to the assessment year 1960-61 in view of clause (ii) of sub-section (2) of S. 24. In others words, he was of the opinion that the business in which losses arose in the earlier years was not the same business which was carried on during the previous year relevant to assessment year 1960-61. On appeal, the Appellate Assistant Commissioner affirmed the Income-tax Officer's view that the income of the previous year relevant to assessment year 1960-61 arose from a business which was different from the business which was carried on during the earlier years. On further appeal, however, the Tribunal agreed with the assessee. It held that the business carried on during the previous year relevant to 1960-61 and the business carried on during the earlier years was one and the same. The Tribunal also rejected the contention urged by the Revenue before it that inasmuch as the losses have not been quantified for the assessment years 1952-53 to 1954-55, the assessee was not entitled to carry forward the losses of those years for being set-off. It also rejected the Revenue contention that during the course of assessment for the assessment year 1960-61 or for that matter 1961-62, the Tribunal cannot direct the quantification of the losses in respect of the said three earlier assessment year, viz., assessment years 1952-53 to 1954-55. Aggrieved with the said decision of the Tribunal, the Revenue applied for referring the aforesaid question for the opinion of the High Court, as stated above.;