COMMISSIONER OF INCOME TAX Vs. DEEPAK TEXTILE INDUSTRIES LIMITED

JUDGEMENT

(1.) THE following has been referred by the Income -tax Appellate Tribunal, Ahemedabad, under section 256(1) of the Income -tax Act to this court for opinion :

(2.) THE facts leading to the present reference briefly stated are as under : The assessee is a private limited company which carries on business of manufacture and sale of cloth. During the assessment year 1969 -70, it disclosed income from business. The assessee claimed set off of unabsorbed depreciation carried forward from the earlier assessment year against the income computed for the assessment year in question. The Income -tax Officer took the view that since the business of the assessee -company relating to manufacture of textiles had come to an end, the set off the unabsorbed depreciation for the earlier years against the income brought to tax for the assessment year in question cannot be granted.

(3.) AGAINST the aforesaid orders, the assessee filed appeals before the Appellate Assistant Commissioner and this claim was made by way of an additional ground. It was, inter alia, contented that the carried forward depreciation formed part and parcel of current year's depreciation and was eligible for set off against the income from other sources, namely, income from other sources and capital gains. However, the Appellate Assistant Commissioner did not accept the contention of the assessee on the ground that carrying on of the business was a necessary condition for allowing the impugned claim. Since the business of textile manufacture was discontinued as nearly as in the assessment year 1964 -65, the assessee was not entitled to get the benefit of allowance as claimed and, accordingly, he rejected the appeals of the assessee for both the years under reference.