2003 (11) TMI 549 - AT - Income Tax

Summary

Issues:
Denial of set off of loss in AOP against other income.

Analysis:
The appeal was filed against the order of CIT(A) for the assessment year 1995-96, challenging the denial of deduction of the share of loss in AOP M/s. Pak Trade Centre. The Assessing Officer disallowed the set off of the share of loss in AOP against the total income of the assessee, stating that the AOP is a separate entity and its loss cannot be deducted from the total income. The CIT(A) upheld this decision, emphasizing that the AOP was a separate taxable entity, and therefore, the set off was correctly denied.

The appellant contended that income tax is a single tax on total income, and any loss from one source can be set off against income from another source. Referring to sections 67A(2) and 70 of the Income-tax Act, it was argued that the share of the assessee in the AOP had been determined and known, and therefore, the set off should be allowed against other business income assessed in the hands of the assessee.

After considering the submissions and the material presented, the Tribunal found that the share of the assessee in the AOP was determined and known, as evident from the assessment order of the AOP. According to section 67A, this share had to be apportioned under the head of business income for the purpose of assessment. Consequently, under section 70 of the Act, the set off of the determined loss against other business income was required. The Tribunal held that the CIT(A) erred in not allowing the claim for set off and directed the Assessing Officer to grant the set off of the determined loss against the other business income in accordance with the provisions of sections 67A and 70 of the Act.

In conclusion, the appeal was allowed in favor of the assessee, and the denial of set off of the share of loss in AOP against other business income was overturned, with directions to grant the set off as per the relevant provisions of the Income-tax Act.