| Case ID |
e292c3e2-cc38-4f22-a147-1ef47ec202f4 |
| Body |
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| Case Number |
IT REFERENCE NO. 253 OF 1999 |
| Decision Date |
Apr 06, 2004 |
| Hearing Date |
|
| Decision |
The Kerala High Court held that a partner of a registered firm is entitled to set off his share of unabsorbed depreciation of the firm against his income of the previous year, even if the firm was not carrying on any business during that year. The ruling emphasized that the existence of the business related to the depreciation originally allowed is not necessary for the purpose of carrying forward and setting off unabsorbed depreciation under section 32(2) of the Income-tax Act. The court noted that this interpretation aligns with the majority view of other High Courts and is favorable to the assessee, particularly in taxation matters where ambiguities should be resolved in favor of the taxpayer. |
| Summary |
The case revolves around the interpretation of section 32 of the Income-tax Act, 1961, focusing on the eligibility of partners in a registered firm to claim unabsorbed depreciation. The Kerala High Court determined that partners could set off unabsorbed depreciation against their income even if the firm was inactive during the relevant year. This ruling aligns with the majority stance taken by various High Courts, which assert that the need for the firm's existence during the previous year is not a prerequisite for claiming such depreciation. This decision is significant for taxpayers and legal practitioners as it clarifies the treatment of unabsorbed depreciation allowances, ensuring that partners are not deprived of benefits due to the firm's closure. The judgment underscores the principle that taxation laws should favor the taxpayer when interpretations are ambiguous, thus providing a precedent for similar cases in the future. |
| Court |
Kerala High Court
|
| Entities Involved |
Not available
|
| Judges |
G. Sivarajan,
Kurian Joseph
|
| Lawyers |
P.K.R. Menon,
George K. George,
John Ramesh
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
A.J. Abraham Anthraper
|
| Citations |
2004 SLD 2326 = (2004) 268 ITR 417
|
| Other Citations |
CIT v. Shiva Prosad Bagaria [1991] 191 ITR 139,
CIT v. A.M.J. Anthraper [1996] 222 ITR 414,
CIT v. Camco Colour Co. [2002] 254 ITR 565,
CIT v. Estate & Finance Ltd. [1978] 111 ITR 119,
CIT v. Rampur Timber & Turnery Co. Ltd. [1973] 89 ITR 150,
CIT v. Virmani Industries (P.) Ltd. [1974] 97 ITR 461,
CIT v. Warangal Industries (P.) Ltd. [1977] 110 ITR 756,
Hyderabad Construction Co. Ltd. v. CIT [1981] 129 ITR 81,
Addl. CIT v. Kapila Textiles (P.) Ltd. [1981] 129 ITR 458,
CIT v. Kishanlal & Sons (Udyog) (P.) Ltd. [1985] 154 ITR 735,
CIT v. Deepak Textiles Industries Ltd. [1987] 168 ITR 773,
CIT v. Sahu Rubbers (P.) Ltd. [1989] 179 ITR 29,
East Asiatic Co. (India) (P.) Ltd. v. CIT [1986] 161 ITR 135,
Sahu Rubbers (P.) Ltd. v. CIT [1963] 48 ITR 464,
CIT v. Dutt's Trust [1942] 10 ITR 477,
Tube Suppliers Ltd. v. CIT [1985] 152 ITR 694,
Hindustan Chemical Works Ltd. v. CIT [1980] 124 ITR 561,
David Sassoon & Co. Ltd., In re [1940] 8 ITR 7,
CIT v. Jaipuria China Clay Mines (P.) Ltd. [1966] 59 ITR 555,
Garden Silk Wvg. Factory v. CIT [1991] 189 ITR 512,
Union of India v. Onkar S. Kanwar [2002] 258 ITR 761,
Petron Engg. Construction (P.) Ltd. v. CBDT AIR 1989 SC 501
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| Laws Involved |
Income-tax Act, 1961
|
| Sections |
32
|