COMMISONER OF INCOME TAX, BOMBAY vs ITALINDIA COTTON CO. (P) LTD.

The Supreme Court held that under Section 79 of the Income Tax Act, 1961, the conditions in clauses (a) and (b) operate in the alternative, not cumulatively. The Court clarified that if either condition is satisfied, the assessee is entitled to carry forward and set off losses from earlier years against current income. The High Court's ruling favoring the assessee was upheld, confirming that a change in voting power alone does not disqualify the set-off unless it is shown to be aimed at avoiding tax liability.