DURGA COTTON MILLS P LTD Vs. INCOME TAX OFFICER
LAWS(IT)-1989-1-19
INCOME TAX APPELLATE TRIBUNAL
Decided on January 30,1989

Appellant
VERSUS
Respondents

JUDGEMENT

R.L. Sangani, Judicial Member - (1.)THIS appeal by the assessee relates to assessment year 1982-83.
(2.)The assessee is a company under liquidation. The assessee-oompany is being assessed through the Official Liquidator. The relevant accounting year ended on 30-6-1981. The original assessment was completed on 31-12-1982. Subsequently, the assessment was reopened. The Official Liquidator had executed conveyance on 12-3-1981 for transfer of the fixed assets in pursuance of the order of the High Court. The assets were transferred for Rs. 45 lakhs. The consideration for transfer in respect of land and building was Rs. 10,10,000, while the consideration for transfer in respect of plant and machinery was Rs. 34,90,000, making in at Rs. 45 lakhs. The conveyance was lodged for registration on 24-3-1981.
The business of the assessee-company had discontinued in the accounting year relevant to the assessment year 1968-69. The business loss of the assessment year 1968-69 was Rs. 1,51,987. Thereafter the company was under liquidation. On account of the sale of the assets in the accounting year relevant to the assessment rear 1982-83 with which we are concerned, profit arose and the said profit was assessable as business income under the special provisions of Section 41(2) of the Act. The assessee claimed that the abovementioned business loss of Rs. 1,51,987 was liable to be set off against the business income assessable under Section 41(2) of the Act. This claim was made under the provisions of Section 41(5) of the Act. Section 41(5) was as under :

41. (5) Where the business or profession referred to in this section is no longer in existence and there is income chargeable to tax under Sub-section (1), Sub-section (2), Sub-section (2A), Sub-section (3) or Sub-section (4) in respect of that business or profession, any loss, not being a loss sustained in speculation business or under the head "Capital gains", which arose in that business or profession during the previous year in which it ceased to exist and which could not be set off against any other income of that previous year shall, so far as may be, be set off against the income chargeable to tax under the sub-sections aforesaid.

(3.)THE Income-tax Officer rejected the claim on the sole ground that provisions of Section 72(3) would override the provisions of Section 41(5) of the Act. THE provisions of Section 72(3) of the Act are as follows :
72. (3) No loss other than the loss referred to in the proviso to Sub-section (1) of this section shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed.



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