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TMI Blog1972 (7) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner at Rs. 1,02,881. The petitioner was aggrieved with the assessment order inasmuch as no adjustment was given in respect of development rebate and depreciation allowance and losses of the earlier years were not set off against the income assessed. The petitioner accordingly moved an application under section 154 for the rectification of the assessment order. The petitioner had suffered losses including the depreciation allowances for the immediately three preceding years as under : Assessment year Determined profit Depreciation or losses Rs. Rs. 1961-62 Loss 16,057 17,556 1962-63 Loss 1,24,607 32,904 1963-64 Loss 37,330 30,470 The petitioner claimed that the losses aforesaid should have been carried forward and set off against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the preceding years should have been carried forward and set off against the total income of the firm for purposes of determination of the " firm tax ". It is not disputed that the losses including depreciation of the preceding years have already been allocated between the partners. But it is contended that, in spite of that allocation, the losses have to be carried forward and set off in the computation of the total income of the firm for purposes of levy of " firm tax ". If this contention of the petitioner is accepted, it would not be liable to any " firm tax ". Now, under the general scheme of the Income-tax Act, losses and profits under different heads have to be aggregated and the net income arrived at, which is liable to tax. If th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of business loss. The same principle is followed in respect of business loss also, so that the business loss of one year which cannot be set off against income from other heads is carried forward and set off against the business profits of the succeeding years. This principle, however, does not apply to a registered firm. Provision with regard to it is contained in section 75 which reads as under : " 75. Losses of registered firms.-(1) Where the assessee is a registered firm, any loss which cannot be set off against any other income of the firm shall be apportioned between the partners of the firm, and they alone shall be entitled to have the amount of the loss set off and carried forward for set-off under sections 70, 71, 72, 73 and 74. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irm tax ". Reliance for this proposition is placed upon a decision of the Income-tax Appellate Tribunal, Bombay Bench " A ", in P. Co., Bombay v. 8th Income-tax Officer, A-Ward, Section I, Bombay. In that case a distinction was sought to be made between a substantive tax which is to be paid by the partners of a registered firm and a subsidiary tax which is to be paid by the registered firm itself. It has been held in that case that the prohibition contained in sub-section (2) of section 75 applies only in the case of determination of substantive tax and does not apply in the case of subsidiary tax payable by the firm. We find no cogent reason for classifying the tax into two categories. It is true that the " firm tax " is levied under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in sub-section (2) of section 32 and sub-section (2) of section 75. If, on the other hand, the " firm tax " is considered to be a tax of a different nature, then also the carry forward of loss and depreciation is not permissible, because there is no provision authorising such a carry forward and set-off. In the judgment of the Income-tax Appellate Tribunal, Bombay, there is a reference to a decision of the Supreme Court in Commissioner of Income-tax v. Kantilal Nathuchand Sami. That was a case under section 24 of the Indian Income-tax Act, 1922, which dealt with set-off and carry-forward of losses. In that case it was held that a registered firm was entitled to carry forward losses in speculation business for set off against profit from sp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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