Commissioner of Income-tax Vs. R. N. MishrA. - Court Judgment

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head note: income tax depreciation--carry forward and set off--firm--full effect not given in assessment of partners. ratio & held : where full effect has not been given to the depreciation allowance in the assessment of the partners, the unabsorbed allowance should be allowed to be set off by the registered firm in the succeeding year. case law analysis : jaipuria china clay mines (p) ltd.'s case (1966) 59 itr 555 (sc)and s. sankappa's case (1968) 68 itr 760 (sc) application : difference between registered and unregistered firm no longer exists these days. currently the unabsorbed depreciation is carried forward in the hands of the firm itself. a. y. : income tax act 1961 s.32(2) - sections 100-a [as inserted by act 22 of 2002], 110 & 104 & letters patent, 1865, clause 10: [dr. b.s. chauhan, cj, l. mohapatra & a.s. naidu, jj] letters patent appeal order of single judge of high court passed while deciding matters filed under order 43, rule1 of c.p.c., - held, after introduction of section 110a in the c.p.c., by 2002 amendment act, no letters patent appeal is maintainable against judgment/order/decree passed by a single judge of a high court. a right of appeal, even though a vested one, can be taken away by law. it is pertinent to note that section 100-a introduced by 2002 amendment of the code starts with a non obstante clause. the purpose of such clause is to give the enacting part of an overriding effect in the case of a conflict with laws mentioned with the non obstante clause. the legislative intention is thus very clear that the law enacted shall have full operation and there would be no impediment. it is well settled that the definition of judgment in section 2(9) of c.p.c., is much wider and more liberal, intermediary or interlocutory judgment fall in the category of orders referred to clause (a) to (w) of order 43, rule 1 and also such other orders which poses the characteristic and trapping of finality and may adversely affect a valuable right of a party or decide an important aspect of a trial in an ancillary proceeding. amended section 100-a of the code clearly stipulates that where any appeal from an original or appellate decree or order is heard and decided by a single judge of a high court, no further appeal shall lie. even otherwise, the word judgment as defined under section 2(9) means a statement given by a judge on the grounds of a decree or order. thus the contention that against an order passed by a single judge in an appeal filed under section 104 c.p.c., a further appeal lies to a division bench cannot be accepted. the newly incorporated section 100a in clear and specific terms prohibits further appeal against the decree and judgment or order of a single judge to a division bench notwithstanding anything contained in the letters patent. the letters patent which provides for further appeal to a division bench remains intact, but the right to prefer a further appeal is taken away even in respect of the matters arising under the special enactments or other instruments having the force of law be it against original/appellate decree or order heard and decided by a single judge. it has to be kept in mind that the special statute only provide for an appeal to the high court. it has not made any provision for filing appeal to a division bench against the judgment or decree or order of a single judge. no letters patent appeal shall lie against a judgment/order passed by a single judge in an appeal arising out of a proceeding under a special act. sections 100-a [as inserted by act 22 of 2002] & 104:[dr. b.s. chauhan, cj, l. mohapatra & a.s. naidu, jj] writ appeal held, a writ appeal shall lie against judgment/orders passed by single judge in a writ petition filed under article 226 of the constitution of india. in a writ application filed under articles 226 and 227 of constitution, if any order/judgment/decree is passed in exercise of jurisdiction under article 226, a writ appeal will lie. but, no writ appeal will lie against a judgment/order/decree passed by a single judge in exercising powers of superintendence under article 227 of the constitution. this is a reference at the instance of the commissioner in income-tax, orissa, raising the following question :'whether, on the facts and in the circumstances of the case, the tribunal was justified in directing the income-tax officer to allow the claim of the assessee to bring forward the unabsorbed depreciation determined in the earlier years and set off against the income of the year under consideration although such unabsorbed depreciation was apportioned in the past among the partners and was allowed to be adjusted against their other incomes in terms of section 32(2) of the income-tax act, 1961 ?'the facts reveal, inter alia, that the assessee is a registered firm. the assessment year is 1979-80. in the immediately preceding assessment year, unabsorbed depreciation was apportioned amongst the partners of the assessee-firm and was allowed to be adjusted against their other incomes in terms of section 32(2) of the income-tax act, 1961. in the assessment year under consideration, the assessee-firm claimed that the unabsorbed depreciation as apportioned in the past, having remained unadjusted, should be carried forward to the year under consideration and adjusted against the profit of the year. the income-tax officer did not discuss the assessees claim. the matter was carried in appeal before the commissioner of income-tax (appeals) from whose order it was found that the assessees claim related to the unabsorbed depreciation pertaining to the assessment years 1975-76, 1976-77 and 1977-78 since allocated for set-off against the income of the partners in the subsequent years. the commissioner of income-tax (appeals) found that the unabsorbed depreciation still remaining unabsorbed for a particular year in the hands of the partners reverted to the firm and was allowable in the next year, first in the income of the firm and so on. the income-tax officer was, therefore, directed to ascertain the unabsorbed depreciation of the firm which still remained to be set off in the hands of the partners and add the same to the depreciation of the current year and allow the same as deduction against the income determined for that year. the matter was taken before the tribunal. the tribunal recorded that on the point under consideration there were conflicting decisions of some of the high courts. since preponderance of judicial decisions was found to be in favour of the assessee, the tribunal upheld the order of the commissioner of income-tax (appeals) in this regard. hence, this reference before this court.during the course of hearing, our attention was drawn to the decision in cit v. singh transport co. . the gauhati high court considered that depreciation allowance has been treated differently by the legislature from business losses and losses in speculation business. the rigour of limitation is not applicable in the case of an unabsorbed depreciation allowance. unabsorbed depreciation never losses its nature or character as depreciation allowance. it is required to be set off and carried forward not by force not by force of section 72 and/or section 73 of the income-tax act, 1961, but by virtue of the provisions of section 32(2) itself. by discussing the facts of the said case in depth and detail it further found that depreciation allowance in the following year is available only to the firm whose income is to be computed as enjoined under sections 182 and 183 of the act. section 32(2) contemplates that the assessment of the partner is relevant only for the purpose of ascertaining whether full effect has not been given to the depreciation allowance. accordingly, it was held that the unabsorbed depreciation of the assessee, a registered firm, for the proceeding assessment years allocated to the partners, not wholly set off in their respective assessments, should be brought back for computation of the total income of the firm in the subsequent years, as if it were the firms unabsorbed depreciation. discussing further, it held that unabsorbed depreciation allowance goes to the partners by virtue of the provisions of section 32(2) itself and section 32(2) is a complete code dealing with set-off and carry forward of depreciation allowance. this view finds support from the observations made by the supreme court in jaipuria china clay mines (p.) ltd.s case : [1966]59itr555(sc) and s. sankappas case : [1968]68itr760(sc) . as per the facts available there, it was made clear that where full effect has not been given to the depreciation allowance in the assessment of the partners the unabsorbed allowance should be allowed to be set off by the registered firm in the succeeding year.by applying the ratio of the aforesaid two decisions to the facts of the present case, we do not find that the tribunal has committed anything wrong. the present question raised before us is, therefore, answered in the affirmative and in favour of the assessee. the s.j.c. is disposed of. no costs.