COMMISSIONER OF INCOME TAX, MADRAS AND ANR. versus MIS DALMIA CEMENT

Citation: [1995] SUPP. 2 S.C.R. 708 · Decided: 16-08-1995 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Appeal(s) allowed

Judgment (excerpt)

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' 
A 
COMMISSIONER OF INCOME TAX, MADRAS AND ANR. 
v. 
MIS DALMIA CEMENT 
AUGUST 16, 1995 
B 
[B.P. JEEVAN REDDY, SUHAS C. SEN AND G.T. NANAVATI, JJ.] 
Income tax Act, 1922-Sections 23(3) and 24(3}-Detennination and 
intimation of loss-Sub section (3) of Section 24 must be construed to be 
c 
mandat01y--Section 23(3) to be read alongwith Section 24(3)-ln case of 
loss-Mandatory upon Income Tax Officer to notify to assessee the amount 
of loss-Income Tax Act, 1961...,-Sections 143(3) and 157. 
Sections 23(3 ), 24(3) and 30-Retums showing losses-Order of refusal 
to make assessment as returns filed beyond period stipulated-Appealable u/s 
D 30-If not appealed against-Question cannot be reagi,tated in assessment 
proceedings relating to a subsequent assessment yea1'--lncome Tax Act, 
1961-Sections 143(3), 157, 246(1). 
The respondent assessee, a public limited company filed its returns, 
E 
for the first time in the year 1956 for the previous years relating inter-alia 
to assessment years 1952-53 to 1954-55. The Income Tax Officer informed 
the assessee that no cognizance could be taken of the said returns as they 
had been filed beyond the period stipulated u/ss 22(1) and 22(2A) of the 
Income Tax Act, 1922. In respect of the assessment years 1955-56 to 
1959-60, the Income Tax Officer found that the assessee had suffered losses 
F 
and determined the same for each of the said years. For the assessment 
year 1960-61, the assessee filed a return showing a loss after bringing 
forward and setting off the losses of the earlier assessment years commenc-
ing from the assessment years 1950-51. The assessee's claim that it was 
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entitled to bring forward and set off the losses of the earlier years against 
G 
the profits for the previous relating to the assessment year 1960-61 was 
rejected. It was held that the business in which losses arose in the earlier 
years was not the same business which was carried on during the previous 
year relevant to assessment year 1960-61. On appeal, the Appellate Assis-
tant Commissioner affirmed the Income Tax Officer's view. On further 
appeal, the Tribunal allowed assessee's claim holding that the business 
H carried on during the previous year and the business carried on during 
708 
COMMR. OF INCOME TAX v. DALMIA CEMENT 
709 
the earlier years was one and the same. the Tribunal rejected the conten-
A 
tion urged by the Revenue that inasmuch as the losses had not been 
quantified for the year assessment years 1952-53 to 1954-55, the assess-
ment was not entitled to carry forward the losses of those years for being 
set off. It also rejected the Revenue's contention that during the course of 
assessment for the assessment year 1960-61or1961-62, the Tribunal could 
not direct the quantification of the losses in respect of the said three earlier 
assessment years, 1952-53 to 1954-55. Against the decision of the Tribunal, 
the Revenue applied for referring the matter for the opinion of the High 
Court. 
B 
The Revenue urged that under the Income Tax Act, each assessment C 
year is an unit by itself; that while dealing with an appeal in relation to a 
particular assessment year, the Tribunal cannot travel outside the scope 
of the appeal and deal with matters relating to other assessment years; 
that in respect of the assessment years 1952-53 to· 1954-55, no loss was 
determined by the Income Tax Officer for the reason that the returns were D 
filed beyond the period prescribed and on the basis of such returns, no 
loss could have been determined and allowed to be carried forward in view 
of provisions contained in Sec. 22(2A); that the assessment in respect of 
the said three assessment years had become final and Tribunal had no 
jurisdiction, while dealing with appeal relating to the assessment year 
1960-61 or 1961-62, to reopen the assessment and determine the loss for E 
those earlier assessment years, carry it forward and set it off against the 
profits made during the year relevant to assessment year 1960-61 of 
1961-62. 
The High Court rejected revenue's case. Hence this appeal. 
F 
The assessee submitted that inasmuch as the requirement of Section 
24(3) had not complied with in respect of the three earlier assessment 
years (1952-53 to 1954-55), the assessee was entitled to claim in the 
assessment proceedings relating to the assessment year 1960-61and1961-
62 that the loss sustained during· earlier assessment years be determined, G 
be carried forward and set off against th

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