9911796707
TMI Blog2001 (10) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that the return was filed outside the time limit provided under section 139(4) by the assessee. The short but interesting question that arises for consideration is "in order to get the benefit of carry forward the loss of share in a firm by the partner, whether a partner is required to file a return under section 139 of the Act?" The brief facts of the case are that the assessee is a Hindu undivided family (HUF) and a partner in the firm, Nagarjuna Construction Corporation. For the assessment year 1983-84, the assessee filed a return of income on May 3, 1985, claiming a loss of Rs.5,59,556. This was arrived at after setting off the loss of Rs.6,93,532 representing the carried forward loss for the assessment year 1982-83 against the current year's income of Rs.1,33,976. For the assessment year 1982-83, the assessee filed the return on May 3, 1985, claiming a loss of Rs.6,93,532, which represents the share of loss from the firm in which the assessee was a partner. As the said return was filed beyond the time limit prescribed under section 139(4) of the Act, the Income-tax Officer did not take cognizance of the said return. Therefore, while completing the assessment fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause it only refers to the provisions contained in the said Chapter and no reference was made to any other provisions falling under any other Chapter. Learned counsel also referred to the provisions of section 139 and contended that when once the loss was determined in the hands of the partner, the said loss has to be carried forward and set off against the income in terms of the provisions of sections 70 to 75. Therefore, learned counsel contended that the Appellate Tribunal was not justified in reversing the order of the first appellate authority. Learned counsel also relied upon a judgment of the apex court in the case of S. Sankappa v. ITO [1968] 68 ITR 760 in support of his contention that the determination of the share of profit or loss in respect of a partner of a firm in the hands of the firm itself is complete and final and no further determination is warranted. Learned standing counsel, on the other hand, contended that the scheme of the Act contemplates that a return has to be filed by each and every assessee. The firm and the partners are different assessable entities. Though a partner may receive a share of profit or loss from the firm, which is apportioned while fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be added to that amount, and the result shall be treated as the partner's share in the income of the firm; (c) where the amount apportioned to the partner under clause (a) is a loss, any salary, interest, commission or other remuneration paid to the partner by the firm in respect of the previous year shall be adjusted against that amount, and the result shall be treated as the partner's share in the income of the firm. (2) The share of a partner in the income or loss of the firm, as computed under sub-section (1) shall, for the purposes of assessment, be apportioned under the various heads of income in the same manner in which the income or loss of the firm has been determined under each head of income. (3) Any interest paid by a partner on capital borrowed by him for the purposes of investment in the firm shall, in computing his income chargeable under the head 'Profits and gains of business or profession' in respect of his share in the income of the firm, be deducted from the share. (4) If the share of a partner in the income of a registered firm or an unregistered firm assessed as a registered firm under clause (b) of section 183, as computed under this section, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub-section (1). (4) (a) Any person who has not furnished a return within the time allowed to him under sub-section (1) or sub-section (2) may, before the assessment is made, furnish the return for any previous year at any time before the end of the period specified in clause (b), and the provisions of sub-section (8) shall apply in every such case; (b) the period referred to in clause (a)shall be-- (i) where the return relates to a previous year relevant to any assessment year commencing on or before the 1st day of April, 1967, four years from the end of such assessment year; (ii) where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1968, three years from the end of the assessment year; (iii) where the return relates to a previous year relevant to any other assessment year, two years from the end of such assessment year. 182. (1) Notwithstanding anything contained in sections 143 and 144 and subject to the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the various heads of income in the same manner in which the income or loss of the firm has been determined under each head of income. A perusal of the above also clearly shows that a regular assessment is contemplated in the hands of the partner also. Apart from this, section 139 contemplates that every person, if his total income or the total income of any other person in respect of which he is assessable under the Act during the previous year, exceeds the maximum amount, which is not chargeable to income tax, shall furnish a return of his income or the income of such other per son during the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as prescribed. This clearly shows that the filing of a return by a person, who is assessable, is mandatory. Further under sub-section (3) of section 139, if any person, who has not been served with a notice under sub-section (2) of that section, has sustained a loss in any previous year and claims that the loss or any part thereof should be carried forward under the provisions referred to therein, he may furnish, within the time allowed tinder subsection (1) or within such furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be considered for any purpose even in the absence of a provision like section 139(10). Even with reference to the contention of learned counsel that when once the net loss is a known figure, which was determined in the hands of the firm, no further determination is warranted and hence the benefit of carry forward and set off could be allowed. This contention is also devoid of merit. There may be individuals, who are partners in many firms and some of the firms may make profits while some of the firms may suffer losses. If the benefit of carry forward, as claimed by the assessee, is to be allowed, the same would result in multiple assessments in the hands of a partner, who is a partner in many firms and the net result would not be known. With reference to an individual only one assessment is contemplated. Here the loss to be carried forward and set off is in the hands of the partner and not in the hands of the firm. The assessment, which was claimed to have been completed, is only with reference to the firm and not with reference to the partner. The firm's assessment would come to an end on apportionment of the profit or loss of the firm to the respective partners in a fir ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
