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TMI Blog1980 (7) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... computation of their individual income from other sources held that both the members were entitled to set off their share of loss in the association of persons against their income from other sources. He held that it is a settled proposition of law that the same income or loss should not be taxed twice and since the loss carried forward had already been apportioned and set off against the other income of the members, the assessee was not entitled for the set-off of the aggregate loss of the earlier years against the income assessed for the years 1969-70. The assessee preferred an appeal before the AAC of Income-tax who allowed the appeal and held that the losses carried forward ought to be set off against the income for the year 1969-70 under s. 72 of the I.T. Act as there was no specific bar for so doing. Being aggrieved by the order of the AAC, the department filed an appeal before the Income-tax Appellate Tribunal and the Tribunal agreed with the ITO and allowed the appeal. On an application made by the assessee under s. 256(1) of the Income-tax Act, 1961 (hereinafter referred to as " the Act "), the Tribunal has referred to this court the following two questions of law for deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proportionate share of loss which is taken into consideration only for the purpose of tax computation of individual members as provided in s. 66 read with s. 86(v) and s. II 0 is no bar for the set-off of the carried forward losses. The learned counsel invited our attention to a passage in the Law of Income Tax in India by V. S. Sundaram, Vol. 1, at page 804, 10th edition, under the Chapter " Losses of unregistered firms or their partners Under synopsis 4 of s. 77, the author states : " Association of Persons: There is no provision in the Act for the apportionment of loss of an association of persons which is not a registered firm or unregistered firm assessed like a registered firm. But under section 80 as in the case of an unregistered firm, the members are not again taxed if the association has been taxed, and the share is included in total income. The inclusion in total income may involve the reduction of total income if the member had other loss, but his other loss cannot be reduced for the purpose of carry forward." He also relied upon a passage in the Law of Income Tax by A. C. Sampath Iyengar. In his commentary on s. 76 of the Act, at page 1247 (6th edition) the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AAC and the Appellate Tribunal. On reference made to the High Court, at the instance of the assessee, it was contended on behalf of the revenue that an association of persons and member of an association of persons were distinct entities for purposes of taxation and, therefore, a member of an association of persons was not entitled to claim a share of his loss in the association of persons against his other income. Repelling that contention, this court invoked the general rule of set-off enacted in ss. 70 and 71 of the Act and held (headnote): Since the charge of tax is on the total income, a natural corollary Of the principle that income-tax is a single tax and not a collection of taxes is that a loss from any source in a year may be set off against income from any other source in that year and so also a loss under any head in a year may be set off against the income under any other head in that year. That general rule of set-off is enacted by sections 70(1) and 71(1) of the Incometax Act, 1961. There was, therefore, no prohibition preventing a member of an association of persons from setting off his share of the loss in the association of persons against his other income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n income. Therefore, it is the contention of the learned counsel that in view of the above two provisions which clearly lay down restrictions on set-off and carry forward of losses in respect of registered and unregistered firms alone, the general right of set-off and carry forward of unabsorbed loss will be available to the association of persons under ss. 70 and 71 of the Act. Invoking only the general right of set-off provided by ss. 70 and 71 of the Act, this court allowed in Abida Khatoon's case [1973] 87 ITR 627 (AP) to the individual members of the association of persons their claim to set off the aggregate carried forward loss to be apportioned and set off against their income from other sources. Otherwise, there is admittedly no other specific provision in the Act for the apportionment of the loss between the individual members of the association of persons and set off of their share of loss against income from other sources. It could never be the intention of the law makers to provide for set-off of the same loss twice over, once by the individual members of the association of persons and again by the association of persons. The benefit conferred by ss. 70 to 80 in Chap. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered firms to the succeeding year under section 24(2). Section 24 of the Income-tax Act, which provides for the carrying forward of a loss in business to the subsequent year or years till the loss is absorbed in profits or till it cannot be carried forward any further, has little to do with the manner in which the total income of an assessee has to be determined for the purpose of finding out the rate applicable to his income taxable in the year of assessment. It provides for a different situation altogether." We are unable to see how this decision is of any relevance to the facts of this case. In this case, an assessee, which is an association of persons, claims a set-off of carry forward loss, which had already been apportioned amongst its individual members, once again against the income in the subsequent year when actually there is no carried forward loss. When no loss carried forward remains, no set-off can be allowed to the association of persons in the assessment year 1969-70. The loss carried forward had already been apportioned among the individual members of the association of persons. We, accordingly, answer the questions referred to us in favour of the revenue an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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