Income-tax---

----Depreciation---Firm---Unabsorbed depreciation allocated amongst partners of firm---Can be carried forward and set-off against profits of firm---Indian Income Tax Act, 1961, S. 32.

Unabsorbed depreciation in the case of the firm which has been allocated amongst the partners should be carried forward and set-off against the profits of the firm.

Garden Silk Weaving Factory v. C.I.T. (1991) 189 ITR 512 (SC) fol.

G.S. Bafna for the Commissioner.

J.K. Ranka for the Assessee.

JUDGMENT

V.K. SINGHAL, J.---These three references have been made by the Income-tax Appellate Tribunal in respect of the assessment years 1976-77, 1978-79, 1979-80 and the following questions of law arising out of the order of the Tribunal have been referred under section 256(1) of the Income-tax Act, 1961:

Assessment year 1976-77:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the unabsorbed depreciation of Rs33,825 in the case of the firm which has been allocated amongst the partners should be carried forward and set-off against the profits of the firm?"

Assessment year 1978-79:

"Whether, on the facts and circumstances of the case, the Tribunal was right in holding that set-off of depreciation that remained, unabsorbed in the assessment of the firm relating to the assessment years 1971-72 to 1975-76 could be allowed against the firm's profit of the previous year relevant to the assessment year 1978-79?"

Assessment year 1979-80:

"Whether, on the facts and in the circumstances of the case, the Tribunal is justified in allowing set-off of unabsorbed depreciation to the assessee-firm?"

The above controversy stands resolved in favour of the assessee following the judgment of the Supreme Court in Garden Silk Weaving Factory v. C.I.T. (1991) 189 ITR 512, which has been considered in Reference No. 22 of 1983 of the assessee for the assessment year 1972-73 (sic). In the light of the said decision, the references are answered in favour of the assessee and against the Revenue and it is held that the Tribunal was justified in allowing set-off of the unabsorbed depreciation of the preceding years from the profits of the firm for the assessment years in question.

No order as to costs

M.BA./158/T.F

Reference answered.