E.K. LINGAMURTHY vs SETTLEMENT COMMNR. (IT&WT)

The Supreme Court analyzed Section 158BB of the Income Tax Act, 1961, regarding the computation of undisclosed income during the block period from 1.4.1986 to 11.10.1996. The Court held that there is a distinction between current losses and carried forward losses, as well as between current depreciation and carried forward unabsorbed depreciation. The Court emphasized that Explanation (a) to Section 158BB does not exclude current year's losses or depreciation but specifically addresses brought forward losses and unabsorbed depreciation under Section 32(2). The judgment clarified the interpretation of 'undisclosed income' as defined in the Act, affirming the need for precise computation in accordance with the statutory provisions.