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Issues Involved:
1. Whether there was any legal admissible evidence to justify the Tribunal's finding that the transaction in question was not the transaction of the assessee. 2. Whether the assessee can claim the set-off of such loss, although it is the loss of an unregistered partnership. Detailed Analysis: Issue 1: Legal Admissible Evidence for Tribunal's Finding The Tribunal and Income-tax authorities disallowed the assessee's claim of Rs. 1,05,641 loss arising from a joint venture with Damji Laxmidas, asserting that the transaction was not genuine and was not the business of the assessee. The Tribunal emphasized that the ankdas (transaction records) were in the name of Damji Laxmidas, not the assessee firm. The Tribunal also noted that the assessee's claim was based on an eight annas share, contrary to the ten annas share stated in the partnership deed. The Tribunal's finding was primarily based on the fact that the ankdas were in the name of Damji Laxmidas. However, the court observed that the partnership agreement allowed for the business to be conducted either in the name of the group of four partners or Damji Laxmidas. The court concluded that there was no legal evidence to support the Tribunal's finding that the transactions were not of the assessee. Issue 2: Set-off of Loss from Unregistered Partnership The court examined whether a partner in an unregistered firm can claim to set off his share of the losses against other business income when the unregistered firm has not been assessed. The assessee argued that there is no provision in the Income-tax Act mandating that an unregistered firm must be assessed before any claim for set-off of its losses can arise. The court reviewed sections 10, 23(5), and 24 of the Income-tax Act, highlighting that an assessee who carries on multiple businesses can set off losses from one source against profits from another under the same head. The court noted that section 23(5)(b) allows the Income-tax Officer to treat an unregistered firm as if it were registered for tax purposes. If the unregistered firm incurs a loss, the partner can claim a set-off against his other business income. The second proviso to section 24(1) states that losses of an unregistered firm not assessed under section 23(5)(b) can only be set off against the firm's income, not the partner's other income. However, the court pointed out that if the Income-tax Officer does not assess the unregistered firm's losses, the individual partner can still claim a set-off against his other business income. The court emphasized that there is no legal requirement for an unregistered firm to be assessed for a partner to claim a set-off for his share of the losses. The court referred to the decisions in J.C. Thakkar v. Commissioner of Income-tax and Jamnadas Daga v. Commissioner of Income-tax, which supported the view that a partner can be assessed on his share of profits or losses in an unregistered firm even if the firm itself has not been assessed. The court rejected the Revenue's argument that the assessee firm should be treated as an unregistered firm consisting of four partners, noting that the Department and Tribunal had proceeded on the basis that the assessee firm and Damji Laxmidas had entered into a partnership. The court concluded that the assessee can claim a set-off for its share of the loss in an unregistered firm if the Income-tax authorities do not determine the firm's loss and bring it to tax as per section 23(5)(b). Conclusion: The court answered the first issue by stating that there was no legal evidence to justify the Tribunal's finding that the transaction was not of the assessee. For the second issue, the court held that the assessee can claim a set-off for its share of the loss in an unregistered firm if the Income-tax authorities do not assess the firm's loss.
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