Income Tax - set off of the loss

E K Lingamurthy Vs Settlement Commissioner (IT AND WT) (Dated: January 22, 2009) Income Tax - set off of the loss suffered in any of the previous year in the block period against the income assessed in other previous years in the block period is not prohibited: only brought forward losses of the past years under Chapter VI and unabsorbed depreciation under Section 32(2) are to be excluded while aggregating the total income or loss of each previous year in the block period but set off of the loss suffered in any of the previous year in the block period against the income assessed in other previous years in the block period is not prohibited. The Settlement Commission had erred in disallowing the application of the assessee for set off of inter se losses and depreciation accruing in any of the previous year in the block period against the income returned/assessed in any other previous year in the block period. Scope of Section 158 BB: Section 158BB , inter alia, states that undisclosed income of the block period shall be "the aggregate of the total income of the previous years falling within the block period" computed in accordance with the provisions of Chapter IV. "Total income" is defined in Section 2(45) to mean the total amount of income referred to in section 5, computed in the manner laid down in the Act. In other words, Chapter XIV does not rule out Chapter IV of the Act in the matter of computation of undisclosed income under Chapter XIV-B. It may be mentioned that ordinarily, in the case of regular assessment, the unit of assessment is one year consisting of twelve months whereas in the case of block assessment, the unit of assessment consists of ten previous years and the period upto the date of the search. Section 158BB provides for aggregation of income/loss of each previous year comprised in the block period. The block period assessment under Chapter XIV-B is in addition to regular assessment.: SUPREME COURT ;