The assessment order for the loss year ends with a line saying the brought forward losses will not be allowed to be carried forward because our shareholding changed. Am I stuck with that when I claim the set-off later?
No. The assessing officer of the loss year has only to notify the amount of the loss he has computed; whether that loss can be carried forward and set off is for the officer who deals with the year in which the set-off is claimed. The Delhi High Court upheld the Tribunal's direction to expunge the remark, and added that unabsorbed depreciation and capital losses do not fall within s.79 at all.
Decided by the High Court (Rajiv Shakdher J and Girish Kathpalia J) on 2023-11-24, reported as ITA 660/2023 with CM APPL. 60770/2023 (Delhi High Court). It bears on section 79, section 72, section 32(2), section 74, section 260A of the Income Tax Act 1961, in Assessment & Scrutiny, Appeals and How Tax Law Is Read matters.
Assessing officers routinely park a sentence like this at the end of an order that otherwise accepts the loss return, and taxpayers often let it go because nothing is demanded that year. This gives you two answers. The first is jurisdictional and rests on a 1965 Supreme Court decision under the 1922 Act: a decision recorded by the officer computing the loss that the loss cannot be set off in a later year is not binding on the assessee. The second is substantive and useful in its own right: on a textual reading, s.79 does not reach unabsorbed depreciation or capital losses. Note the shape of the order. The Court closed the appeal saying no substantial question of law arose, so this is a refusal to admit rather than an answered question, and the observation on the scope of s.79 was made while dealing with a facet the Revenue's counsel had not addressed. Note also that the judgment reproduces and construes s.79 'as it then prevailed' for assessment year 2014-15 — the pre-2020 text — and expressly shows clause (b) as omitted by the Finance Act 1988 with effect from 1 April 1989.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The assessee filed its return for assessment year 2014-15 on 29 November 2014 declaring a current loss of Rs. 17,56,64,494. On scrutiny an assessment order was passed on 22 December 2016 accepting the loss return, but the officer added the observation that brought forward losses were not allowed to be carried forward as per paras 3, 4 and 5 of his order. The assessee had carried forward business losses of earlier years of Rs. 44,71,06,071, unabsorbed depreciation of Rs. 48,14,14,166 and a capital loss of an earlier year of Rs. 5,15,650. The Commissioner (Appeals) dismissed the appeal, relying on s.79. The Tribunal allowed the assessee's appeal by order dated 5 December 2022 and directed the officer to expunge the concluding remark, holding that the officer of the loss year had only to notify the amount of the loss and that carry forward and set-off was for the officer of the later year to decide. The Revenue appealed, contending that there had been a change in shareholding of more than 51 per cent so that whether the losses could be carried forward was within the officer's remit.
No substantial question of law arose and the appeal was closed. The view taken by the Tribunal was correct: a textual reading of s.79 does not empower an assessing officer exercising jurisdiction for a particular assessment year to place limitations on the adjudicatory powers of the officer who will deal with the year in which set-off is claimed (paras 15 and 16.2). Separately, a perusal of s.79 shows that unabsorbed depreciation and capital losses do not fall within its scope and ambit (para 19). Whether the losses can in fact be set off is for the officer of the relevant year to examine (para 20).
The Court set out s.79 as it then stood, including the two provisos and the note that clause (b) had been omitted by the Finance Act 1988 with effect from 1 April 1989, and read it as prohibiting carry forward and set off where there has been a change in shareholding unless the case fits one of the provisos (paras 15.1 and 16). It then held that nothing in the section allows the officer of one year to bind the officer of another (para 16.2), and applied the Supreme Court's construction of s.24(2) and s.24(3) of the 1922 Act in CIT v Manmohan Das (Deceased), which it treated as pari materia with s.72: whether a loss may be carried forward and set off in a later year has to be determined by the officer dealing with the assessment of the subsequent year, and a decision recorded by the officer who computes the loss that it cannot be set off against later income is not binding on the assessee (para 17). The Court added that counsel for the Revenue had not addressed the assessee's right to carry forward unabsorbed depreciation and capital losses, which do not fall within s.79 (paras 18 and 19), and that there is no practical efficacy in carrying anything forward unless the possibility of a future set-off exists, which is for the officer of the year of set-off to examine (para 20).
A perusal of Section 79 of the Act would show that unabsorbed depreciation and capital losses do not fall within its scope and ambit.
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Handle my notice → Ask a CA on WhatsAppNo. The assessing officer of the loss year has only to notify the amount of the loss he has computed; whether that loss can be carried forward and set off is for the officer who deals with the year in which the set-off is claimed. The Delhi High Court upheld the Tribunal's direction to expunge the remark, and added that unabsorbed depreciation and capital losses do not fall within s.79 at all. This was decided by the High Court (Rajiv Shakdher J and Girish Kathpalia J) and bears on section 79, section 72, section 32(2), section 74, section 260A of the Income Tax Act 1961. It is reported as ITA 660/2023 with CM APPL. 60770/2023 (Delhi High Court). Assessing officers routinely park a sentence like this at the end of an order that otherwise accepts the loss return, and taxpayers often let it go because nothing is demanded that year. This gives you two answers. The first is jurisdictional and rests on a 1965 Supreme Court decision under the 1922 Act: a decision recorded by the officer computing the loss that the loss cannot be set off in a later year is not binding on the assessee. The second is substantive and useful in its own right: on a textual reading, s.79 does not reach unabsorbed depreciation or capital losses. Note the shape of the order. The Court closed the appeal saying no substantial question of law arose, so this is a refusal to admit rather than an answered question, and the observation on the scope of s.79 was made while dealing with a facet the Revenue's counsel had not addressed. Note also that the judgment reproduces and construes s.79 'as it then prevailed' for assessment year 2014-15 — the pre-2020 text — and expressly shows clause (b) as omitted by the Finance Act 1988 with effect from 1 April 1989. If it applies to you, the first step is this: Appeal the remark rather than living with it. The relief the Tribunal gave and the High Court upheld was a direction to the assessing officer to expunge the concluding observation.
The assessee filed its return for assessment year 2014-15 on 29 November 2014 declaring a current loss of Rs. 17,56,64,494. On scrutiny an assessment order was passed on 22 December 2016 accepting the loss return, but the officer added the observation that brought forward losses were not allowed to be carried forward as per paras 3, 4 and 5 of his order. The assessee had carried forward business losses of earlier years of Rs. 44,71,06,071, unabsorbed depreciation of Rs. 48,14,14,166 and a capital loss of an earlier year of Rs. 5,15,650. The Commissioner (Appeals) dismissed the appeal, relying on s.79. The Tribunal allowed the assessee's appeal by order dated 5 December 2022 and directed the officer to expunge the concluding remark, holding that the officer of the loss year had only to notify the amount of the loss and that carry forward and set-off was for the officer of the later year to decide. The Revenue appealed, contending that there had been a change in shareholding of more than 51 per cent so that whether the losses could be carried forward was within the officer's remit. The matter was decided on 2023-11-24 by the High Court (Rajiv Shakdher J and Girish Kathpalia J). On those facts the High Court held as follows. No substantial question of law arose and the appeal was closed. The view taken by the Tribunal was correct: a textual reading of s.79 does not empower an assessing officer exercising jurisdiction for a particular assessment year to place limitations on the adjudicatory powers of the officer who will deal with the year in which set-off is claimed (paras 15 and 16.2). Separately, a perusal of s.79 shows that unabsorbed depreciation and capital losses do not fall within its scope and ambit (para 19). Whether the losses can in fact be set off is for the officer of the relevant year to examine (para 20).
The Court set out s.79 as it then stood, including the two provisos and the note that clause (b) had been omitted by the Finance Act 1988 with effect from 1 April 1989, and read it as prohibiting carry forward and set off where there has been a change in shareholding unless the case fits one of the provisos (paras 15.1 and 16). It then held that nothing in the section allows the officer of one year to bind the officer of another (para 16.2), and applied the Supreme Court's construction of s.24(2) and s.24(3) of the 1922 Act in CIT v Manmohan Das (Deceased), which it treated as pari materia with s.72: whether a loss may be carried forward and set off in a later year has to be determined by the officer dealing with the assessment of the subsequent year, and a decision recorded by the officer who computes the loss that it cannot be set off against later income is not binding on the assessee (para 17). The Court added that counsel for the Revenue had not addressed the assessee's right to carry forward unabsorbed depreciation and capital losses, which do not fall within s.79 (paras 18 and 19), and that there is no practical efficacy in carrying anything forward unless the possibility of a future set-off exists, which is for the officer of the year of set-off to examine (para 20). In the words reproduced by the source cited on this page: "A perusal of Section 79 of the Act would show that unabsorbed depreciation and capital losses do not fall within its scope and ambit." The decision followed or applied Commissioner of Income-tax v. Manmohan Das (Deceased), (1966) 59 ITR 699 (SC), decided 5 November 1965 — applied.
It was decided by the High Court on 2023-11-24 and is reported as ITA 660/2023 with CM APPL. 60770/2023 (Delhi High Court). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 79, section 72, section 32(2), section 74, section 260A, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. No substantial question of law arose and the appeal was closed. The view taken by the Tribunal was correct: a textual reading of s.79 does not empower an assessing officer exercising jurisdiction for a particular assessment year to place limitations on the adjudicatory powers of the officer who will deal with the year in which set-off is claimed (paras 15 and 16.2). Separately, a perusal of s.79 shows that unabsorbed depreciation and capital losses do not fall within its scope and ambit (para 19). Whether the losses can in fact be set off is for the officer of the relevant year to examine (para 20). It arises in Assessment & Scrutiny, Appeals and How Tax Law Is Read matters, on section 79, section 72, section 32(2), section 74, section 260A of the Income Tax Act 1961, and was decided by Rajiv Shakdher J and Girish Kathpalia J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If the year of set-off is already under assessment, argue the s.79 question there on its own merits and treat the earlier remark as of no effect, citing CIT v Manmohan Das (Deceased), (1966) 59 ITR 699 (SC). Quantify separately: in this case the company carried forward business losses of Rs. 44.71 crore, unabsorbed depreciation of Rs. 48.14 crore and a capital loss of Rs. 5.15 lakh, and the Court pointed out that the last two are outside s.79. Check the text of s.79 for the year you are arguing about. This judgment sets out the pre-2020 text; for assessment year 2020-21 onwards the substituted section with its s.79(2) carve-outs applies.
Searched for later treatment; none was found. That is not the same as a source affirming it. A citator search on citedby:113358252 returns nothing. A second search for "Burda Druck" returns 17 documents, none of which cites the 24 November 2023 judgment; the only Supreme Court entry is an unrelated daily order of 2015. No later decision applies, doubts or distinguishes the holding on s.79, and no special leave petition surfaced. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The report carries two paragraphs numbered 13.1 in succession, the second of which contains the citation of Manmohan Das; that is how the digitally signed copy reads. The Tribunal order under appeal is dated 5 December 2022 and stamped 4 January 2023, and the Revenue's appeal was 152 days late, the delay being condoned so that the appeal could be dealt with on merits. A commentary listing gives the ITR citation as (2025) 483 ITR 469; I did not verify that against the report and have not put it in the citation line. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
No substantial question of law arose and the appeal was closed. The view taken by the Tribunal was correct: a textual reading of s.79 does not empower an assessing officer exercising jurisdiction for a particular assessment year to place limitations on the adjudicatory powers of the officer who will deal with the year in which set-off is claimed (paras 15 and 16.2). Separately, a perusal of s.79 shows that unabsorbed depreciation and capital losses do not fall within its scope and ambit (para 19). Whether the losses can in fact be set off is for the officer of the relevant year to examine (para 20).
TaxSphere, “PCIT v Burda Druck India Pvt Ltd”, https://taxnotice.vittsphere.com/caselaw/case/pcit-v-burda-druck-india-79-remark-in-loss-year-order/ (validity last checked 2026-09-07)
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The officer has invoked s.79 after a change in our shareholding and struck out everything brought forward, including unabsorbed depreciation. Does s.79 reach unabsorbed depreciation?
My closely held company changed hands and the Assessing Officer has knocked out the brought-forward loss under section 79. The section has been rewritten more than once — which text governs my assessment year?
I filed this year's return late under section 139(4). The Assessing Officer has now refused to carry forward a capital loss and unabsorbed depreciation that both came from the earlier year, whose return was on time. Can he do that?
The resolution professional never filed the company's returns during the insolvency process. The new management filed them late and the carry forward of losses has gone. Will the Board condone the delay?
