| Case ID |
42d2bd60-a3fd-4d6d-9ca2-6273038507ee |
| Body |
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| Case Number |
IT REFERENCE CASE No. 96 OF 1977 |
| Decision Date |
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| Hearing Date |
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| Decision |
The court held that after setting off the unabsorbed depreciation of the assessee-registered firm for a particular assessment year against the individual income of its partners, any remaining unabsorbed depreciation cannot be carried forward to the next assessment year for the firm. The unabsorbed depreciation allowance is allocated between the individual partners and can be set off against their personal income. The decision emphasized that the right to carry forward unabsorbed depreciation lies solely with the partners, not the firm itself. This ruling clarifies the interpretation of section 32(2) of the Income-tax Act, 1961, establishing that partners must individually account for unabsorbed depreciation in their assessments, ensuring that the benefits of depreciation allowances are not double-counted for both the firm and the partners. |
| Summary |
This case revolves around the interpretation of section 32(2) of the Income-tax Act, 1961, specifically regarding the treatment of unabsorbed depreciation for registered firms. The Karnataka High Court ruled that after the unabsorbed depreciation is offset against the individual incomes of the firm's partners, any remaining depreciation cannot be adjusted against the firm's income in subsequent assessment years. The judgment highlights the distinction between the rights of the firm and those of the partners concerning unabsorbed depreciation, affirming that partners are entitled to carry forward their respective portions of unabsorbed depreciation for their individual assessments. This case is pivotal for understanding the tax implications for partnerships in relation to depreciation allowances and sets a precedent for similar disputes. |
| Court |
Karnataka High Court
|
| Entities Involved |
Not available
|
| Judges |
K. Jagannatha Shetty,
S.R. Rajasekhara Murthy
|
| Lawyers |
S.P. Bhat for the Applicant.,
K. Srinivasan and H. Raghavendra Rao for the Respondent.
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| Petitioners |
Shankaranarayana Construction Co.
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1984 SLD 391 = (1984) 145 ITR 467
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| Other Citations |
CIT v. Jaipuria China Clay Mines (P.) Ltd. [1966] 59 ITR 555 (SC),
CIT v. Garden Silk Wvg. Factory [1975] 101 ITR 658(Guj.),
K.T. Wire Products v. Union of India [1973] 92 ITR 459 (All.),
Raj Narain Agarwala v. CIT [1970] 75 ITR 1(Delhi),
CIT v. Singh Transport Co. [1980] 123 ITR 698 (Gauhati),
CIT v. Nagapatinam Import & Export Corpn. [1979] 119 ITR 444 (Mad.)
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| Laws Involved |
Income-tax Act, 1961
|
| Sections |
32(2)
|