Long term Capital losses brought forward from earlier years have to be first set off against the long term capital gains of the current assessment year before allowing deduction u/s. 80T
[Relying on Distributors (Baroda) Pvt. Ltd. - Vs - Union of India 155 ITR 120(SC)]

Notice for reassessment was issued. The assessee filed return disclosing further losses. However no order was passed by the ITO on the returns so filled. The assessee filed Writ before M. P. High Court to issue mandamus to complete the assessment. High Court dismissed Writ on the ground that mandamus could not be issued compelling the ITO to make an assessment order beyond the period of limitation prescribed u/s. 153(2). Supreme Court dismissed appeal by the assessee upholding view of High Court.

1. In an application u/s 245C there should be a disclosure of income not earlier disclosed by the assessee before the A. O. If the A. O. has already discovered it or has gathered the material to establish the particulars of income or fraud fully, or is likely to establish it, then assessee cannot be allowed to defeat or forestall the entire exercise of income tax authorities. If the department already knows and gathered the particulars of such income there is no disclosure by the assessee.

2. The forum of settlement is not meant for those who come to forestall the investigation/enquires i.e. those who come after the event (of detection by the department).

3. The ITSC cannot say that any material collected after the filling of application u/s 245C cannot relied on the CIT.

4. Even where authorities know that an application u/s 245C has been filed, it does not men that I.T. Authorities should fold their hans and stop their investigation.

5. Nothing prevents the ITSC from looking into the material collected subsequent to the submission of the report by the CIT if such a course is called for in the interest of justice.

6. Assessee Co. declares loss of Rs. 32.80 lac after claiming huge losses in the trade of potatoes , metal scrap and shares. The A.O. enquired and held that loss claimed in the trade of potatoes, metal scrap and shares were bogus and the assessment was made on income of Rs.1.27 crores for the A.Y. 1985-86. the CIT (A) confirmed the AO's order. However in the meantime the assessee came before ITSC.

7. In the application 245C filed for A.Y.85-86 to 88 -89, it offered additional income of Rs. 1.32 crores and for A.Y. 85-86, it withdrew some losses, so claimed in the return. The ITSC admitted the application.

8. The assessee objected that CIT in his report can only take into account material upto the date of application and not thereafter.

9. Held (i) Applicant had only offered part of losses claimed by it and not offered any undisclosed income not disclosed before the A.O. (ii)The ITSC was not right in holding that in deciding whether the commission should accept the application to be proceeded with u/s 245 - D(1)it would not look into the material collected after the date of filling of the application.
[Followed/explained in 223 ITR 840((SC);252 ITR1(SC) 259 ITR475 (SC)]

Unquoted equity shares other than shares of investment company or managing agency company are to be valued as per Rules 1D prescribing uniform break-up method of valuing shares with balance sheet of a company as a base even is a going concern. Such method is valid and is mandatory.
[Followed/ applied in 210 ITR 233 (DEL); 214 ITR 507 (KER); 210 ITR 637 (MAD)); 215 ITR 30 (BOM); 215 ITR200(BOM); 215 ITR 722(RAJ); 215 ITR 749 (MAD); 217 ITR 686 (DEL); 219 ITR 570 (KER);220 ITR 258 (ALL);222 ITR 7(PAT); 222 ITR 316(MP); 224 ITR 698 (CAL); 229 ITR 671(KAR); 232 ITR 677 (MAD); 233 ITR 29 (GAU); 237 ITR 220 (GAU); 233 ITR 119 (GUJ); 239 ITR 360 (MAD); 243 ITR 195 (AP); 246 ITR 104 (DEL); 248 ITR 111 (SC); 248 ITR 183 (SC); 248 ITR 379(GUJ); 248 ITR 575 (SC); 248 ITR 781(MAD); 252 ITR 382(MAD); 258 ITR 625 (GUJ)]

In the case discretionary trust amount actually received by beneficiary can be assessed in the hands of the beneficiary - no principal that only trustee should br assessed. [Followed/applied in - 231 ITR 524 (SC); 231 ITR 540(GUJ); 236 ITR 37 (SC)]

Construction of a dam is not equal to manufacturing or producing of an article or "thing" within the meaning of section 88H(2)(i) (applicable upto 1.4.90). Test for manufacture whether the commodity, which is subjected to the process of manufacture can no longer be regarded as the original commodity but is recognized in the trade as a new and distinct commodity.
"Production" has wider connotation than the word "manufacture". Every manufacture is a production but all productions are not manufacture.
The words manufacture or production are normally associated with moveable articles and goods. They are not associated with construction activities.
In the process of construction of a "dam" there is no process of production or manufacture. Pressure piling being intermediatory process in the construction of a dam/building, is an integral part of construction of a dam. It is no different than any other contract work - being part and parcel of a larger construction.
Bore Wells are also not article or thing entitled to investment allowance.
(Applied / affirmed/followed in 213 ITR 869 (KER); 215 ITR 445(ORI); 215 ITR 938 (MAD); 216 ITR 455 (MAD); 221 ITR 48 (AP); 222 ITR 626 (AP); 223 ITR 32 (GAU); 224 ITR 75 (MAD); 226 ITR 924 (MP); 227 ITR 916 (KER); 228 ITR 652 (MP); 235 ITR 614 (MP); 230 ITR 814 (BOM); 239 ITR 466 (MP); 238 ITR 1018 (BOM); 239 ITR 737 (MAD); 240 ITR 718 (CAL) ; 241 ITR 90(KER); 242 ITR 76 (MAD); 243 ITR 832 (MAD); 244 ITR 356 (KER); 245 ITR 4756 (MP); 250 ITR 123 (DEL) 250 ITR 730 (KER); 253 ITR 58 (MP); 254 ITR 55(DEL); 254 ITR 283 (DEL))

INTEREST ON STICKY LOANS IS TAXABLE.
In merchantile system of accounting interest sticky loan, debited to the account of a debtor but credited to suspense account accrues and is taxable. Circular of the Board cannot detract from or over-ride the provision of the Act. It would be destructive of all known principles of law as that would really amount to giving power to a delegated authority to even amend the provision of law enacted by the Parliament. [Followed in - 218 ITR 618 (MAD); 233 ITR 450(HP); 236 ITR 357 (MAD); 237 ITR 578 (BOM); 242 ITR 122 (MAD); 252 ITR 225 (BOM)]
[Overruled in 237 ITR 889(SC) on the ground that assessee can get the benefit of circular from CBDT dated 9th October 1984, which allowed the A.O. to tax interest on sticky loans for 3 years but if not received in fourth year and onwards then it will be treated as interest on doubtful loans and will not be taxed on accrual basis but would be taxed on actual receipt basis.]

Subsidy granted by Govt. as a percentage of actual cost fro setting up industries in backward areas- need not be deducted from actual cost for the purposes of calculating depreciation .
[Followed /applied in - 217ITR 355(RAJ); 224 ITR 242 (P & H); 225 ITR 901 (RAJ); 226 ITR 934 (KER); 233 ITR 497 (MAD) ; 234 ITR 497 (MAD); 234 ITR 47(MAD); 234 ITR 53 (MAD) 236 ITR 507(P & H); 236 ITR 780(BOM); 237 ITR 545 (KER); 239 ITR 115 (P & H); 240 ITR 605 (MAD); 248 ITR 814 (MAD); 255 ITR 243 (MAD); 257 ITR 417 (P & H); 258 ITR 387 (RAJ); 258 ITR 780 (GUJ); 259 ITR 692 (GUJ)]

A method prescribed for valuation, in the Act or in the Rules, is only procedural and would be applicable to all pending proceedings also.

Where an assessment is set aside in appeal and fresh assessment is made the interest u/s 244(1) runs from the date of fresh assessment order and not from he date of appellate order-refund will arise on fresh assessment and only then interest thereon will arise.