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TMI Blog1994 (3) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the said loss of Rs. 10,974 can be resorted to as a prima facie adjustment under section 143(1)(a). The facts are few and they may be stated as under: 3. The assessee is an individual and he is a partner in four firms. He held shares in those firms as follows: (1) Sri Devi Paints Sanitary Stores, Ongole ... 60% (2) Sri Prasad Babu Co., Ongole ... 50% (3) Sri Prasad Babu Co., Uppugonduru ... 7 paise (4) Sri Kali Prasad Electrical Stores, Ongole ... 40% Except the firm at Uppugonduru, all the three firms were already income-tax assessees. For assessment year 1989-90, the assessee filed an income-tax statement claiming the ultimate income representing the share income of the assessee from all the four firms at Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished at page 1 of the paper book. The main purpose of the petition is to object to the disallowance of loss of Rs. 10,974 sustained by the assessee in M/s. Sri Kali Prasad Electrical Stores, Ongole towards his share. It is contended in the petition that while acting under section 143(1)(a), there is no warrant for ignoring the share of loss as claimed by the assessee. It is contended that it is no doubt true that the return filed by M/s. Sri Kali Prasad Electrical Stores is out of time and hence not a valid return under section 139(2) of the Income-tax Act and is also true that the loss returned is not entitled to be carried forward under section 80 of the Income-tax Act. But it is contended that section 80 is silent about the set off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of partner's share in the income of the firm whether income or loss. Section 67(iv) speaks of loss specifically of a partner towards his share in a registered firm. Section 70 speaks of set off of loss from one source against income from another source under the same head of income. (ii) Section 67(iv) is a specific provision with regard to treatment of share of loss of a partner in a registered firm. The assessee's case falls under section 70 of the Income-tax Act. This section precludes set off of loss which is saved by other provisions in Income-tax Act. One such saving is a return of loss of a registered firm filed beyond time limit prescribed under section 139(3) of the I.T. Act. Such a return shall be deemed to have been not furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as clearly wrong. Aggrieved against the order of the first appellate authority, the present appeal is filed before this Tribunal and thus the matter stands for my consideration. 6. I have heard Shri C. Shiv Kumar, learned counsel for the assessee and Shri C.V. Surya Prakash Rao, the learned Departmental Representative. Shri Shiv Kumar contended the following. The relevant assessment year being 1989-90, the return of loss of M/s. Sri Kali Prasad Electrical Stores should have been filed on or before 31-8-1989. It has failed to do so. Section 75(1) of the Income-tax Act governs losses of registered firms. For the sake of ready reference it is given as follows: "75. (1) Where the assessee is a registered firm, any loss which cannot be set o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only the Assessing Officer of the firm who can make the apportionment of loss of partners. 7. Under section 70, except losses relating to speculation business and lotteries, etc., the loss under any source falling under any head of income is to be set off against income from any other source under the same head of income in the same assessment year. The balance which remained even after such set off is to be set off against income under any other head of income for the same assessment year under section 71. 8. Section 80 or section 139(3) do not say anywhere that a loss sustained cannot be set off under the provisions of section 70, or section 71 in the same assessment year. It is only the right to carry forward for set off in a subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive relied upon the orders of the lower authorities. 9. Thus after hearing the arguments on either side, I am inclined to agree with the interpretation given by the learned advocate for the assessee on sections 70 and 71 of the I.T. Act vis-a-vis sections 80 and 139(3) of the I.T. Act. Under section 71 loss sustained by the assessee in one of the firms can be adjusted from out of the profits derived by him from other firms in the same assessment year and for making this adjustment, the assessment by the Assessing Officer of the firm which suffered loss is not necessary and this adjustment can be made even on the basis of the data furnished in the income-tax statement of the assessee, a partner of the firm. It is significant that we are n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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