- (1.) ON an application under S. 256(2) of the IT Act, 1961, this Court directed the Tribunal to refer the following question, set out at p. 2 of the statement of case, for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the allowance of the carry forward and set off of the earlier year's losses from tea growing and manufacturing business against the income from service charges received during the year ?" In compliance with the direction the Tribunal has referred the aforesaid question for our opinion.
(2.) THE assessee's tea estate was taken over by the Government of West Bengal on 21st April, 1981. The writ petition was filed by the assessee. The High Court held that the taken over of the tea estate by the Government of West Bengal was illegal and accordingly directed the Government to restore the possession of the tea estate to the assessee. Against that the Government went to Supreme Court and till decision of the Tribunal the matter was pending before the Supreme Court. The ITO noticed that in spite of the decision of this Court the management and control of the tea estate continued to remain with the West Bengal Tea Development Corporation, Government of West Bengal undertaking. During the accounting year, therefore, the assessee received only service charges on account of services rendered to other companies in the matter of tea cultivation. The assessee-company, therefore, claimed set off of the business losses incurred while it was running the tea gardens against the income by way of service charges received in the accounting year relevant to the asst. yrs. 1984-85 and 1985-86. The ITO rejected the claim of the assessee on the ground that as per proviso to s. 72(1)(i) of the IT Act, 1961 the business in respect of which the loss was originally computed should continue to be carried on in the previous year in which the set off of loss is claimed. When the assessee has not continued the business in the previous year, in which it suffered loss. That loss cannot be set off against the income of the previous years, as it has not carried on the same business. In appeal before the CIT(A), the CIT(A) has considered the claim of the assessee. When there is a common management and control of the business, the carry forward of unabsorbed loss should be allowed to set off against the business of the current assessment year and in appeal before the Tribunal the Tribunal has confirmed the view taken by the CIT(A) and also followed the decision of the Supreme Court in the case of Hooghly Trust (P) Ltd. vs. CIT (1969) 73 ITR 685 (SC) and B.R. Ltd. vs. CIT 1978 CTR (SC) 82 : (1978) 113 ITR 647 (SC) : TC 45R.362.
(3.) NONE appeared for the assessee. Heard the learned counsel for the Revenue.;