Income Tax Act, 1961

--Business income--Profits chargeable to tax Rebate allowed to assessee vis-a-vis losses not set-off under section 72(1)--Assessee-society purchases electricity from MSEB and sells the same to consumers in area earmarked for it. Assessee-society consistently incurred losses due to disparity in purchase price and sale price of electricity. There was a revision of tariff after representation and assessee as such got substantial benefit by way of rebate to the extent of Rs.541.80 crores from the dues payable to MSEB. Assessing officer made addition treating the entire rebate as cessation of liability. Held: Not justified. Though rebate relates to tariff debited to Profit and Loss Account in respective years, the losses, totalling to Rs. 1,40,46,06,586 pertaining to assessment years 1978-79 to 1992-93 which were worked out after debiting the said tariff, had lapsed and assessee could not get the benefit of set-off due to period of limitation provided under section 72(3), section 41(1), therefore, could not be applied to the extent of Rs. 1,40,46,06,586 and said amount had to be reduced from total rebate of Rs.541.80 crores which had been brought to tax.