COMMISSIONER OF INCOME TAX vs. KADODARA PAPER IND. PVT.LTD.

ITR/195/1994HC GujaratGJHC24020271199407 November 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA2 pages

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What did the High Court hold?

The High Court held that the Tribunal was correct in law in allowing the set-off of unabsorbed depreciation brought forward from earlier years against the income of the current year, even in the absence of business income. The Court reasoned that this conclusion is in line with the ratio laid down in the cited decisions of CIT vs. Deepak Textiles Industries Ltd. and CIT vs. Virmani Industries Pvt. Ltd. The question referred is answered in the affirmative, favoring the assessee. The reference is disposed of accordingly, with no order as to costs.

What were the facts?

The Commissioner of Income Tax (Revenue) has referred a question of law to the High Court of Gujarat at Ahmedabad concerning the assessment years 1981-82, 1982-83, and 1984-85. The reference arises from an order passed by the Income-tax Appellate Tribunal. The assessee, Kadodara Paper Ind. Pvt. Ltd., had claimed set-off of unabsorbed depreciation allowance against its rental income, which was assessed under the head 'income from other sources'. The Tribunal had allowed this set-off. The Revenue is challenging this decision.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that set-off or unabsorbed depreciation allowance has to be allowed whether there is business income or not, and is to be allowed against any other head of income and the assessee is allowed to set off of the same against the rental income which is derived by the Company by letting on hire/lease its entire business assets and which has been assessed as 'income from other sources'? (Question of law) Contentions: Assessee: Not recorded as none appeared. Revenue: Submitted that the question is concluded by the decisions of the High Court and the Apex Court in CIT vs. Deepak Textiles Industries Ltd., 210 ITR 1029 and CIT vs. Virmani Industries Pvt. Ltd., 216 ITR 607.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 195 of 1994

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE D.A.MEHTA

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

Whether it is to be circulated to the Civil Judge? : NO

The order continues below.

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