9911796707
TMI Blog1956 (10) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... firm of R.B. Bansilal Abirchand had in the past business at all these places. Bikaner, Secunderabad and Shailu are outside British India. The sources of the assessee's income in the year of account were speculation, allowance from government as treasurers, house property and dividends. 3. In the course of the assessment for the year 1942-43, a question of setting off the profits of the year of account against some loss of the immediately preceding year came up for consideration by the Income- tax Officer. The Income-tax Officer in paragraph 3 of his assessment order observed as under: Last year the assessee was in a net loss of ₹ 53,078 which has been carried forward. It is to be split up in the proportion of the individual British Indian business loss, the foreign business loss and the share loss. The loss from the individual British Indian business was ₹ 2,62,012 and that from the foreign business ₹ 2,200. The share loss from the R.B.B.A. was ₹ 38,158. In this year the firm of R.B. Bansilal Abirchand stopped all business and there is no income or loss from that source. The loss to be set off will be ₹ 53,078 less S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st the assessment for the year 1941-42, but did not take up the contention now sought to be raised. In our opinion, the third ground of appeal cannot be raised in the appeal against the assessment for the year 1942-43. 4. The assessee has raised three questions before us and with regard to these, the respondent, viz., the Commissioner of Income-tax, Madhya Pradesh Bhopal, in his written reply states that these questions do not arise out of the Tribunal's order. In our opinion, a question of law does arise and we refer the following question: Whether the assessee was competent in law to raise a question with regard to the determination of loss for the assessment year 1941-42, as finally determined in appeal, in the course of proceedings for the assessment year 1942-43 when the loss brought forward from 1941-42 was being set off? 5. One of the points raised by the assessee in his appeal before the Tribunal for the assessment year 1948-49 was with regard to the imposition of a tax on capital gains. The assessee sold during the year of account ending Diwali of 1947 (S.Y. 2003) four houses. The houses had come to the assessee on the distribution of some o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm computed in the manner laid down in section 16(1)(b), on which the tax has already been paid by the firm. It is not very clear from the assessment order as to what the Income-tax Officer did with regard to this profit, but it appears from the Appellate Assistant Commissioner's order that though the Income-tax Officer included the entire share income for the purpose of determining the total income of the assessee, as also for the purpose of determining the rate at which tax on total income was to be paid by the assessee, for the purpose of exemption under section 14(2)(c) the share income from the unregistered firm, viz., ₹ 1,82,773, was reduced by the Income-tax Officer by the amount of business loss suffered by the assessee to the extent of ₹ 1,18,913, being ₹ 1,08,905 loss in his own individual business and ₹ 10,008 share loss in another firm. In other words, the Income-tax Officer did not calculate tax because of the provisions of section 14(2)(a), on the amount of ₹ 63,860 (Rs. 1,82,773 minus ₹ 1,18,913). 7. The action of the Income-tax Officer was upheld by the Appellate Assistant Commissioner by his order dated 15th September, 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income-tax, Madras v. Ratanshi Bhavanji*. 9. Similar is the case with regard to the assessment year 1949-50. The assessee's share income from the unregistered partnership amounted to ₹ 1,39,922. The Income-tax Officer instead of exempting that amount from tax under section 14(2)(a) reduced it by business loss of ₹ 60,589, which was made up of ₹ 49,479, loss from individual business and ₹ 10,610, being share of loss from another firm. The facts and circumstances relating to this year are the same as those of the assessment year 1948-49. 10. Out of the facts stated above, a question of law that arises is: Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the loss suffered by the assessee from his personal business (including his share of loss from another firm) cannot be set off under section 24(1) against his taxed share income from an unregistered firm? 11. The facts stated herein as well as the questions raised have been accepted by the parties, except that according to Mr. Thakkar the statement in the middle of paragraph 5 to the effect that the houses were poss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come- tax Officer. In paragraph 3 of his order, the Income-tax Officer observed: Last year the assessee was in net loss of ₹ 53,078, which has been carried forward. It is to be split up in the proportion of the individual British Indian business loss, the foreign business loss and the share loss. The loss from the individual British Indian business was ₹ 2,62,012, and that from the foreign business ₹ 2,200. The share loss from the R.B.B.A. was ₹ 38,158. In this year the firm of R.B. Bansilal Abirchand stopped all business and there is no income or loss from that source. The loss to be set off will be ₹ 53,078 less ₹ 6,698 = ₹ 46,380, (Rs. 45,994 from British Indian business and ₹ 386 from foreign business). This order was confirmed in appeal by the Appellate Assistant Commissioner. When the matter came up before the Tribunal, it observed as below: The third ground of appeal relates to the assessment made for the year 1941-42. For a long time Mr. Thakkar himself was not quite clear what was claimed by the third ground. Ultimately, he said that in so far as the computations made in the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 12B of the Indian Income-tax Act of 1922 is ultra vires the Indian Legislature? (2) Whether on the facts and in the circumstances of the case the profit of ₹ 16,400, on the sale of the three houses can be said to be covered by the second proviso to section 12B(1) of the Act? 5. The case of the Department concerns two assessment years, namely 1948-49 and 1949-50. The assessee's share of the profits of an unregistered firm for the year 1948-49 was ₹ 1,82,773. The Income-tax Officer included the entire share income for the purpose of determining the total income of the assessee, as also for the purpose of determining the rate at which tax on total income was to be paid. For the purpose of exemption under section 14(2)(c) of the Act the share income from the unregistered firm, namely ₹ 1,82,773, was reduced by the amount of business loss suffered by the assessee to the extent of ₹ 1,18,913 made up of ₹ 1,08,90, loss in his individual business and ₹ 10,008, share loss in another firm. In other words, the Income-tax Officer did not calculate tax on the amount of ₹ 63,860 (Rs. 1,82,773 minus ₹ 1,18,913). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee in the assessment year 1948-49. That contention, again, is based upon a misapprehension. The right to claim a relief which the assessee is claiming only arose to the assessee in the assessment year 1948-49 when the assessee had made profits and sought to set off the losses incurred during the previous years against the profits. The fact that the Income-tax Officer has not computed the loss of the earlier years can have no bearing upon the right of the assessee which arises in the year 1948-49. There is nothing to prevent the Income-tax Officer from computing those losses which the assessee may have incurred earlier and which he has failed to do. In that case the question was as to the effect of the failure of the Income-tax Officer to notify the loss of the previous years as required by section 24(3) of the Act, but that does not make any difference to the principle enunciated above. No question arose in the assessment year 1941-42 in this case of computing the amount of the loss. That question arose in the assessment year 1942-43. Therefore, what was done in the preceding year does not affect the right of the assessee to get the amount of the loss which was li ..... X X X X Extracts X X X X X X X X Extracts X X X X
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