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TMI Blog1966 (9) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... is an individual. The assessment year is 1955-56. The relevant accounting year is the financial year 1954-55. During the relevant accounting year the assessee was a partner in an unregistered firm, Messrs. S. B. Production, having one-half share therein. The Income-tax Officer had assessed this unregistered firm and computed its total loss at Rs. 1,01,174. Thus, the assessee's share of loss comes to Rs. 50,587. Apart from this partnership in this unregistered firm, this assessee had income from other sources like salary, house property and dividends. The total income from these other sources came to Rs. 34,066. After deducting the earned income relief allowable in his case, the assessee's total income was assessed at Rs. 31,786. Now the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be read in the context of that particular section and not divorced from it. The second proviso of section 24(1) of the Act has necessarily to take colour and meaning from the main subject-matter of section 24(1) of the Act. The opening words of section 24(1) of the Act use the expression "Where any assessee sustains a loss" of profits or gains in any year under any of the heads mentioned in section 6, he shall be entitled to have the amount of the loss set off against his income, profits or gains under any other head in the year. The words "any assessee" imply an assessee without any qualification and must therefore include an assessee within the definition of the Income-tax Act. According to section 2(2) of the Income-tax Act, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partners of the firm ; ... " What thereafter follows relates to the registered firm with which again we are not concerned in this reference. The expression "where the assessee is an unregistered firm" in the second proviso of section 24(1) of the Act means this that the general right of setting off loss under the opening words in the first paragraph of section 24(1) of the Act will not avail where the assessee is an unregistered firm. In other words, if the assessee is an unregistered firm the loss shall only be set off against the income of the unregistered firm, and not against the income of the partners of the unregistered firm. Mr. De made full use of the following observations of the Supreme Court in Commissioner of Income-tax v. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et off having regard to the clear language used in the second proviso to section 24(1) of the Act. Therefore, the assessee can never really get any help from the argument which Mr. De advanced. Looking at the point from another angle, Mr. De's argument creates a situation that, if the assessee is not an unregistered firm in the sense in which he wanted this court to interpret that language of the second proviso, then every partner of such unregistered firm will be in a position to nullify the whole object, purpose and effect of the second proviso, on the ground then that the assessee in the proceedings is a partner and not the unregistered firm itself. That interpretation which Mr. De for the assessee suggests would really lead to a repeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect that the second proviso to section 24(1) cannot be construed as an independent enactment, must be read subject to the provisions of the main section and that its conclusion that the right to set off loss under one head against the profits from another head is in accord with the view that we have taken. (See the observations of Gujarat High Court in the report, specially at pages 365 and 370). Mr. Pal for the Commissioner of Income-tax relied on the Bombay High Court decision in Commissioner of Income-tax v. Jagannath Narsingdas and the Supreme Court decision in Commissioner of Income-tax v. Jadavji Narsidas & Co., both of which have already been discussed in our previous unreported judgment mentioned above. For these reasons, we ans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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