M.Y.EQBAL, J. - (1.) ON the reference application from the side of the Revenue, the Tribunal has referred the following question under Sec. 256 of the Income -tax Act: Whether on the facts and in the circumstances of the case, the Tribunal was justified in directing the Assessing Officer to allow adjustment of unabsorbed depreciation and investment allowance of earlier years in spite of the fact that the return was filed late?
(2.) THE facts of the case, in brief, necessary for answering the question are as under: The assessee is a partnership firm. Original statement was completed under Sec. 143(1) of the Income -tax Act Income -tax Act. Subsequently, the Assessing officer passed revisional order under Sec. 154 of the Act, withdrawing the allowance of carry forward of depreciation and investment in respect of assessment year 1985 -86 on the ground that there was delay in filing the return of income. The Assessing officer took the view that under Sec. 80 of the Income -tax Act, carry -forward of losses could not be allowed if the return is filed late. According to the Assessing Officer, return of income for the assessment year 1985 -86 was filed on 30.10.1985 as against the due date of 30.6.1985 and so the carry -forward of allowance granted earlier was unjustified. Aggrieved by the said order of the Assessing Officer, the assessee preferred appeal before the Commissioner of Income -tax (Appeals). The appellate authority was of the view that the carry -forward of business losses and carry -forward of the unabsorbed depreciation and investment allowance are on different footings. According to the appellate authority, Sec. 80 did not apply to the carry forward of unabsorbed depreciation and unabsorbed investment allowance. Accordingly, the appellate authority allowed the appeal, set aside the order of the assessing officer and directed him to consider the matter and allow adjustment of unabsorbed depreciation and unabsorbed investment allowance. Against the said order, the Revenue preferred Second Appeal before the Income -tax Appellate Tribunal, Patna. The Tribunal affirmed the order and held that the benefit is not to be denied merely on the ground of belated filing of return. The Tribunal, however, referred the question quoted herein above for answer by this Court.
(3.) WE have heard Mr. K.K. Jhunjhunwala, learned Counsel appearing for the Revenue and, Mr. Binod Poddar, learned Senior Counsel appearing for the assessee.;