Commissioner Of Income-Tax vs Bombay Gas Co. Ltd.
2002 Latest Caselaw 1205 Bom

JUDGMENT

S.H. Kapadia, J.

1. Despite notice, assessee has chosen to remain absent. Affidavit of service filed by the Department is taken on record and marked "X". In this Reference, we are concerned with the Assessment Year 1971-72. The Department has come by way of Reference under Section 256(1) of the Income Tax Act, 1961.

2. The following question of law has been referred to us :--

"Whether on the facts and in the circumstances of the case, the Tribunal was justified in directing the setting off of the brought forward business loss and unabsorbed depreciation against long-term capital gains of the current year in terms of Section 72?"

ANSWER :

3. In view of Section 72 of the Income Tax Act, the assessee was not entitled to set off of brought forward business loss and unabsorbed depreciation against long-term capital gains of the current assessment year.

Accordingly, the above question is answered in the negative i.e. in favour of the Department and against the assessee.

4. Before concluding this Judgment, we may point out that for the Assessment Year 1971-72, the assessee did not show any income under the head "capital gains" while filing the original return. The assessment was completed on January 30, 1973. On 5-2-1973, the assessee informed the ITO that during the Assessment Year 1971-72, the assessee had sold certain shares and capital gain had arisen which was not included in the return. Since the assessment was completed on 30-1-1973, the ITO reopened the assessment to bring in the capital gains which had escaped the assessment. On reopening, the ITO computed the capital gains which had escaped assessment originally at Rs. 44,338/. However, in the course of reassessment proceedings, the assessee claimed capital loss suffered by them in 1969-70 in respect of which they claimed set off against the capital gain of Rs. 44,338/-. The claim was not accepted on the ground that, in reassessment proceedings, one can bring in the income which had escaped the assessment but no allowance or deduction, originally not allowed, could be claimed. This view of the Department is correct. It is supported by Judgment of the Supreme Court in the case of CIT v. Sun Engineering Works P. Ltd. reported in (1992) 198 ITR 297.

ORDER

Accordingly, we answer the above question in the negative i.e. in favour of the Department and against the assessee.

Reference is accordingly disposed of. No order as to costs.