C. I. T. Central - III v. Kailash Pati Kedia - 2015-LL-0427-33

Citation	2015-LL-0427-33
Appellant Name	C. I. T. Central - III
Respondent Name	Kailash Pati Kedia
Court	HIGH COURT OF CALCUTTA
Relevant Act	Income-tax
Date of Order	27/04/2015
Assessment Year	1994-95
Judgment	View Judgment
Keyword Tags	unabsorbed depreciation • interest earned • erstwhile firm
Bot Summary:	The following two questions were formulated at the time of presentation of the appeal; 2 i) Whether in the facts and circumstances of the instant case the learned Tribunal was justified in upholding the CIT s order in treating the interest income of Rs.4,43,836/- as business income instead of income from other sources as treated by the Assessing Officer. Ii) Whether the learned Tribunal was justified in not upholding the order of the CIT that in view of the amendment in Section 32(2) of the Income Tax Act, 1961 by the Finance Act, 1992 with effect from 1.4.1993, the adjustment of carry forward of unabsorbed depreciation of the erstwhile firm in which the respondent had been a partner was not permissible in the hands of the assessee for the assessment year 1993-94 and onwards. In so far as the first question is concerned, it is not in dispute that the major part of the interest was earned by the assessee from some monies invested in a firm of which the assessee was a partner. In Clause of Section 28, interest earned by a partner is a business income. The Tribunal was correct in 3 treating the income as business income. In so far as the second question is concerned, it was not disputed before us that the unabsorbed depreciation of the partnership was allowed to be carried over by the partners prior to 1st April, 1993. The amendment effected from 1st April, 1993 could not disentitle the partners from claiming the benefit of set off of the unabsorbed depreciation.

ORDER SHEET ITA NO.523 OF 2004 IN HIGH COURT AT CALCUTTA Special Jurisdiction(Income Tax) ORIGINAL SIDE C. I. T. CENTRAL III, KOLKATA Versus SHRI KAILASH PATI KEDIA BEFORE: Hon'ble JUSTICE GIRISH CHANDRA GUPTA Hon'ble JUSTICE ARINDAM SINHA Date : 27th April, 2015. MD.NIZAMUDDIN, MR.S.N. DUTTA,ADVOCATES FOR APPELLANT MR.J.P.KHAITAN,SR.ADVOCATE, MR.SANJAY BHOWMICK, MR.P.JHUNJHUNWAL, MR.C.S.DAS,ADVOCATES FOR RESPONDENT Court : appeal is directed against judgment and order dated 22nd July, 2002 pertaining to assessment year 1994-95. following two questions were formulated at time of presentation of appeal; 2 i) Whether in facts and circumstances of instant case learned Tribunal was justified in upholding CIT (A) s order in treating interest income of Rs.4,43,836/- as business income instead of income from other sources as treated by Assessing Officer. ii) Whether learned Tribunal was justified in not upholding order of CIT (A) that in view of amendment in Section 32(2) of Income Tax Act, 1961 by Finance Act, 1992 with effect from 1.4.1993, adjustment of carry forward of unabsorbed depreciation of erstwhile firm in which respondent had been partner was not permissible in hands of assessee for assessment year 1993-94 and onwards. In so far as first question is concerned, it is not in dispute that major part of interest was earned by assessee from some monies invested in firm of which assessee was partner. In Clause (v) of Section 28, interest earned by partner is business income. Therefore, Tribunal was correct in 3 treating income as business income. Therefore, question is answered in affirmative. In so far as second question is concerned, it was not disputed before us that unabsorbed depreciation of partnership was allowed to be carried over by partners prior to 1st April, 1993. Therefore, amendment effected from 1st April, 1993 could not disentitle partners from claiming benefit of set off of unabsorbed depreciation. fact that depreciation originally was allowable to partnership lost importance once depreciation was permitted to be carried over by individual partners upon dissolution of partnership. We are, as such, of opinion that view taken by learned Tribunal is correct. question is answered in affirmative. appeal is thus dismissed. (GIRISH CHANDRA GUPTA, J.) (ARINDAM SINHA, J.) sb. C. I. T. Central - III v. Kailash Pati Kedia

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