| Case ID |
e98a3d4b-8f02-4080-9eeb-bcd1e1debad3 |
| Body |
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| Case Number |
IT REFERENCE No. 52 OF 1980 AND REFERENCE CASE No. |
| Decision Date |
Jul 15, 1985 |
| Hearing Date |
|
| Decision |
The Kerala High Court ruled that the provisions of section 79 of the Income-tax Act, 1961 place a bar only on the carry forward and set off of losses and not of unabsorbed depreciation or unabsorbed development rebate. The court observed that the term 'loss' in section 79 does not encompass unabsorbed depreciation and development rebate, which are classified as allowances under the Act. Therefore, the carry forward of these items is permissible under the law. The court held that the Tribunal's decision to allow the carry forward of unabsorbed depreciation and unabsorbed development rebate was justified, emphasizing that section 79 was not applicable to these allowances. |
| Summary |
In the landmark decision by the Kerala High Court, the interpretation of section 79 of the Income-tax Act, 1961 was critically examined. The case involved the carry forward and set off of losses for a company that had undergone a change in shareholding. The court clarified that while section 79 imposes restrictions on the carry forward of losses, it does not apply to unabsorbed depreciation or unabsorbed development rebates. This distinction is crucial for companies as it allows them to utilize these allowances without the restrictions outlined in section 79. The ruling reinforces the understanding that different types of financial allowances are treated distinctly under tax law, a topic of significant relevance for corporate tax planning. The decision also highlights the importance of precise language in legal statutes, where terms such as 'loss' and 'allowance' must be understood in their specific contexts. This case is a vital reference for tax professionals and corporate entities navigating the complexities of income tax regulations in India. |
| Court |
Kerala High Court
|
| Entities Involved |
|
| Judges |
K. Bhaskaran, C.J.,
V. Bhaskaran Nambiar, J.
|
| Lawyers |
P.K.R. Menon,
N.R.K. Nair,
S.A. Nagendran,
N.N.D. Pillai
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Kalpaka Enterprises (P.) Ltd.
|
| Citations |
1986 SLD 1266 = (1986) 157 ITR 658
|
| Other Citations |
CIT v. Jaipuria China Clay Mines (P.) Ltd. [1966] 59 ITR 555 (SC),
CIT v. Concord Industries Ltd. [1979] 119 ITR 458 (Mad.),
CIT v. Madras Wire Products [1979] 119 ITR 454 (Mad.),
CIT v. Nagapatinam Import & Export Corpn. [1979] 119 ITR 444 (Mad.),
CIT v. Shri Subhlaxmi Mills Ltd. [1976] Tax. 45(3)-201 (Guj.),
In re. Laxmichand Jaiporia Spg. & Wvg. Mills, [1950] 18 ITR 919 (East Punj.)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
79,
32(2),
35(4)
|