JUDGMENT Aravind Kumar, J.— The assessee is questioning the correctness and legality of the order passed by the Tribunal, Bangalore Bench, Bangalore, in IT(SS)A No. 70/Bang/2004 dt. 13th May, 2005. At the time of admission of the appeal on 14th Feb., 2006, the following substantial questions of law have been formulated for consideration of this appeal: 1. Whether on the facts and in the circumstances of the case the order of the quasi judicial authority like the Tribunal is not wholly vitiated when it falls to consider a crucial question of fact like the filing of the annual returns before the RoC which is urged by the appellant in support of its claim that the regular books of accounts were maintained before the date of search in the normal course of business especially when the plea for relief of the appellant is turned down on the alleged ground by it that books of accounts were not so maintained? 2. Whether on the facts and in the circumstances of the case the appellate order of the Tribunal is perverse on the ground that it relied upon a totally absent alleged admission by an unnamed person that regular books of accounts were not maintained prior to the date of search in the normal course of business especially when the order of assessment and the other evidence before it clearly showed that the contrary was the fact and more so when the denial of relief sought by the assessee is wholly based upon such alleged admission? 3. Whether on the facts and in the circumstances of the case the appellate order of Tribunal is perverse on the ground that it is based upon alleged contents of a statement under Section 132(4) of the IT Act to the effect that the books of accounts were not maintained before the date of search in the normal course of business when in fact such statement on record clearly indicated that such books of accounts were maintained and more so when the plea for relief of the appellant was turned down on that sole ground that books of accounts were not maintained by deriving support from such sworn deposition? 4. Whether on the facts and in the circumstances of the case the appellant was entitled to deduction of any part of the sums aggregating to Rs. 43,55,201 being the unabsorbed depreciation and Rs. 4. Whether on the facts and in the circumstances of the case the appellant was entitled to deduction of any part of the sums aggregating to Rs. 43,55,201 being the unabsorbed depreciation and Rs. 42,10,769 being the unabsorbed losses against the income for the relevant assessment years while computing the total undisclosed income for the purpose of the block assessment in question? 2. The brief facts leading to the filing of this appeal are, for the block assessment period 1st April, 1990 to 18th Jan., 2001, a return of income came to be filed by the assessee in response to the notice issued under Section 158BC on 13th July, 2001 as the assessee had not filed returns of income for the asst. yrs. 1992-93 to 2000-01. 3. The assessee is a manufacturer of Indian made foreign liquor and search was carried out on 18th Jan., 2001 by the respondents. After issuance of notice under Section 158BC as referred to supra and filing of the return of income, the same came to be processed by the AO under Section 143(3) r/w Section 15BBC of the IT Act, 1961 (hereinafter referred to as 'the Act' for brevity) and on the basis of certain credits found during the course of search, petitioner offered for tax in a sum of Rs. 140 lakhs. However, while filing the return, a sum of Rs. 45,50,000 which had been refunded from out of the share application money set off losses and depreciation was claimed by pressing into service Section 158BB of the Act by the assessee. The AO by his order dt. 31st Jan., 2003 disallowed the claim made by the assessee. Aggrieved by the same, assessee filed an appeal before the CIT(A) in ITA No. 415/Dy. CIT-CC-2(2)/CIT(A)/2003-04. It was contended before the appellate authority that loss and unabsorbed depreciation of the respective assessment year in which cash credit is assessed as income was required to be set off against the cash credit assessed as income even after the amendment to Section 158BB(1)(c) of the Act to set off against unexplained credits assessed offered as income and assessed as such, which the AO has rejected on the ground that in view of the retrospective amendment made to Section 158BB(1)(c) of the Act by Finance Act, 2002 with retrospective effect from 1st July, 2005. The relevant findings of the AO read as under: The AO however rejected the contention on the ground that the same was not valid in view of the retrospective amendment made to Section 158BB(1)(c) of the Act by the Finance Act, 2002 which was made effective retrospectively w.e.f 1st July, 1995. The AO in this context at para 7.3 has observed as under. The unexplained call advances, investment in excess stock, unexplained deposits are added to the income/loss arrived based on the books to arrive at the aggregate income of the block period which includes undisclosed income and it works out to Rs. 1,20,633,124. The aggregate of the losses for the block period based on the books is Rs. 1,21,85,758 as per Section 158BB(1)(c) and the income for the asst. yrs. 1996-97 and 1998-99 are taken as nil in view of the provisions of Section 158BB(1)(ca). Therefore following the principle laid down in the Section 158BB(1), the undisclosed income of the block period works out to Rs. 2,42,48,882. 4. The appellate authority on considering the contentions raised in the appeal memo did not agree with the same and by order dt. 31st Jan., 2004 dismissed the appeal and confirmed the findings of the AO. 5. Aggrieved by the said order, the assessee filed further appeal before the Tribunal, Bangalore Bench in IT(SS)A No. 70/Bang/2004 by reiterating the contentions raised before the appellate authority. However, the said contentions raised by the appellant-assessee did not find favour before the Tribunal and accordingly, by order dt. 13th May, 2005, the appeal filed by the assessee came to be dismissed. It is the said order which is now assailed in this appeal by the appellant-assessee. 6. We have heard Sri Ashok Kulkarni, learned Counsel appearing for the appellant-assessee and Sri M.V. Seshachala, learned senior standing Counsel appearing for the respondent-Revenue. 7. 13th May, 2005, the appeal filed by the assessee came to be dismissed. It is the said order which is now assailed in this appeal by the appellant-assessee. 6. We have heard Sri Ashok Kulkarni, learned Counsel appearing for the appellant-assessee and Sri M.V. Seshachala, learned senior standing Counsel appearing for the respondent-Revenue. 7. Sri Ashok Kulkarni, learned Counsel for the appellant-assessee, would submit that the Tribunal was in error in coming to a conclusion about the non-maintenance of the books of accounts in the normal course on the basis of an alleged admission which factually was not so in as much as there was no such admission made and further the records itself clearly depicted that the accounts were, in fact, regularly maintained from year to year and returns have also been filed before the RoC together with all accounts, balance sheet, P&L a/c for each year in question and hence, the finding of the Tribunal is contrary to facts. He would also submit that the said accounts placed before the AGM and approved by them have been filed before the RoC. Accordingly, he would submit that the unabsorbed depreciation and unabsorbed loss for each assessment year are entitled to be set off in respect of the assessment years included in the block period for the purposes of computing of total undisclosed income which has been assessed in the block assessment. 8. Per contra, Sri M.V. Seshachala, learned Counsel appearing for the respondent in support, of the order of the authorities and the Tribunal would submit that the evidence found as a result of search showed huge advances, share application money received and such undisclosed income is to be reduced by the income or loss and the increase by losses would arise only while computing the aggregate of the total income and such losses are reduced. In view of the return having been filed, the income declared for such years are to be ignored which has been done in the instant case by the AO and thus the AO was justified in rejecting the claim of the assessee relating to set off of loss and unabsorbed depreciation pertaining to the asst. yrs. 1992-93 to 1997-98 claimed by the assessee. yrs. 1992-93 to 1997-98 claimed by the assessee. It is also reiterated by Sri M.V. Seshachala that in the statement recorded under Section 132(4) of the Act, a clear admission is made that neither the books of accounts are regularly maintained nor the returns of income for the purposes of the income have been filed and as such in no other way such income is disclosed to the AO before the date of search and contends that what is computed is only the undisclosed income found as a result of search and thus, the same does not require to be assessed by any loss or depreciation and thus presses into service Section 158BB(1) of the Act. 9. Having heard the learned Counsel for the parties and perused the records pertaining to the present appeal, we find from the statement recorded under Section 132(4) of the Act that in respect of question No. 4, it is answered that the books of accounts for the period 1990-91 to 1996-97 have been maintained and furnished it to the auditor for being audited. The said reply given to the questions are enumerated hereinbelow: Q. 4: Please state where the books of accounts are maintained for the period inception to date for M/s H.E. Distilleries. Yes, the books of accounts are regularly maintained but for the period 1990-91 to 1996-97 is partly available as Mr. Venkatesh our distillary accountant removed the books and took along with him. For the period 1997-98 to as on date the books are computerised and available with us. 10. During the course of arguments it was brought to the notice of this Court that in almost identical circumstance, the Hon'ble Supreme Court in the case of E.K. Lingamurthy and Anr. v. Settlement Commission (IT & WT) and Anr. (2009) 222 CTR 1 (SC): (2009) 19 DTR 99 (SC): (2009) 314 ITR 305 (SC) has held that in computing of undisclosed income for the block assessment resulting on account of search and seizure, the brought forward loss and unabsorbed depreciation are required to be set off and is permissible by examining Section 158BBC(4) Expln. (a) of the Act and accordingly, held as follows: In this case, we are concerned with the computation of 'undisclosed income' under Section 158BB of the Act. (a) of the Act and accordingly, held as follows: In this case, we are concerned with the computation of 'undisclosed income' under Section 158BB of the Act. Section 153BB, inter alia, states that undisclosed income of the block period shall be the aggregate of the total income of the previous years falling within the block period' computed in accordance with the provisions of Chapter IV. Total income' is defined in Section 2(45) to mean the total amount of income referred to in Section 5, computed in the manner laid down in the Act. In other words, Chapter XIV does not rule out Chapter IV of the Act in the matter of computation of undisclosed income under Chapter XIV-B. It may be mentioned that ordinarily, in the case of regular assessment, the unit of assessment is one year consisting of twelve months whereas in the case of the block assessment, the unit of the assessment consists of ten previous years and the period upto the date of the search. Section 158BB provides for aggregation of income/loss of each previous year comprised in the block period. The block period assessment, under Chapter XIV-B is in addition to regular assessment. Analysing Section 15BB(4) r/w Expln. (a) thereto, one finds that only brought forward losses of the past years under Chapter VI and unabsorbed depreciation under Section 32(2) are to be excluded while aggregating the total income or loss of each previous year in the block period but set off of the loss suffered in any of the previous years in the block period against the income assessed in other previous year in the block period is not prohibited. In our view, the Settlement Commission had erred in disallowing the application of the assessee for set off of inter se losses and depreciation accruing in any of the previous years in the block period against the income returned/assessed in any other previous year in the block period. 11. In our view, the Settlement Commission had erred in disallowing the application of the assessee for set off of inter se losses and depreciation accruing in any of the previous years in the block period against the income returned/assessed in any other previous year in the block period. 11. We find from the order-sheet that the substantial questions of law have been formulated as enumerated hereinabove and we find that in view of the submissions made by the learned Counsel for the parties and the judgment of E.K. Lingamurthy (supra) that the substantial question of law requires to be reframed and accordingly, it is refrained as follows: Whether the AO was correct in rejecting the claim of the assessee that set off of loss and unabsorbed depreciation is to be reduced from the total income of the assessee or not? 12. While the similar issue having been considered by the Hon'ble Supreme Court in E.K. Lingamurthy's case (supra) and the issue being no more res Integra, this substantial question of law reframed by us hereinabove requires to be answered in favour of the assessee and against the Revenue. 13. However, with regard to the quantification of the said entitlement, the same requires to be considered by the AO on the basis of the materials available before the AO and as such for the said limited purpose of quantifying the entitlement of set off of loss and depreciation, the matter is remitted to the AO to redo the exercise and arrive at the total taxable income. 14. Accordingly, this appeal is allowed. No order as to costs.