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TMI Blog1980 (3) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... 65, it suffered a loss in that business. In that year the assessment of the assessee was completed on August 19, 1968, taking his share of speculation loss from the firm at " nil " subject to rectification the assessment of the firm was completed on March 24, 1969, and the total loss was determined at Rs. 2,39,406 which comprised of loss in ready business at Rs. 23,614 and loss in speculation business at Rs. 2,15,792. The loss in ready business was apportioned amongst the three partners of the firm according to their profit-sharing ratio. As for the loss in speculation business it was not so apportioned and a note was made to the following effect by the ITO: " " The above loss will be set off against future speculation losses, if any". It shall not be out of place to mention at this very stage that the apportionment of the loss in speculation business was made by the ITO under s. 158 of the I.T. Act (hereafter " the Act ") on 31st August, 1974, and the amount which fell to the assessee's share was Rs. 71,931. In the meantime in the previous year relevant to the assessment year 1972-73 the firm earned profit in speculation business and that profit came to s. 22,274 in the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a loss incurred in any gambling activity, if the net result in respect of any source under any head is a loss, that loss may be set off under s. 70 against income from another source under the same head. If after setting off the loss against income under the same head the result is still a loss, such loss may be set off under s. 71 against income of the same year under any other head. If the loss cannot be set off under s. 71 because of the absence or inadequacy ofthe income of the same year under any other head it may be carried forward and set off against the profits of a subsequent year as provided under s. 72.Then comes s. 73 which provides for losses of speculation business. Unlike other losses a loss in speculation business cannot be set off under s. 70 against any income under the same head, nor can it be set off under s. 71 against income under any other head. It can be set off only against profits, if any, of another speculation business. In case loss computed in respect of speculation business for any assessment year has not been set off under sub-s. (1), then so much of the loss as is not so set off or the whole loss, where the assessee had no income from any other spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of ss. 147 to 153 which deal with proceedings for reassessment.Section 153 lays down time limit for completion of assessment and reassessment and s. 154 provides for the rectification of a mistake apparent from the record. As for other amendments provision is made in s. 155, and sub-s. (1) thereof, which is relevant for our purpose, deals with amendment of a completed assessment of the partner of a firm, as a result of assessment, reassessment or further proceedings by way of appeal, reference, rectification or revision. Such amendment may be, done within four years from the date of the final order, in the case of the firm as laid down in sub-s. (7) of s. 154. Section 156 provides for the service of a notice of demand and then come ss. 157 and 158 which would be of particular relevance to the present controversy. These sections read as under: " 157. When, in the course of the assessment of the total income of any assessee, it is established that a loss has taken place which the assesses entitled to have carried forward and set off under the provisions of sub-section (1) of section 72, sub-section (2) of section 73, sub-section (1) of section 74 or sub-section (3) of section 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to carry forward such loss for a period of 8 years cannot be curbed by reference to the period of 4 years providing rectification of the assessment of the partner under s. 155(1) Another submission made was that unless an order of apportionment had been passed under s. 158, an order under s. 155(1)could not have been passed and since the order under s. 158 was passed on 31st August, 1974, the claim of the assessee was still well within time. After carefully considering the rival submissions, we are inclined to agree with the view taken by the Appellate Tribunal. We do not propose to enter into the question as to whether the partner's right to carry forward the loss for 8 years can be curbed by reference to the provision of limitation of four years within which an order under s. 155 is required to be made. The position is that the various provisions relating to procedure for assessment, to which we have referred above, have, in our opinion, to be read as a whole. In the case of a firm the total income assessed is to be apportioned amongst the several partners and it is only when such apportionment has been made that a completed assessment of a partner of a firm can be amended un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The contention raised by the department to repel that claim of the assessee was that the loss which had been determined and ordered to be carried forward must be deemed to have become final because no appeal was filed against that determination. That submission was repelled on the view that the ITO had not notified the loss " computed by him by order in writing and an appeal could not be taken on that point ". The assesses was thus hold entitled to have the loss re-determined in a subsequent year. This decision may not have a direct bearing on the present case, but certainly it would enable us to appreciate the purpose of the intimation of loss under s. 157 or the intimation of assessment of the firm under s. 158. Section 35(5) of the 1922 Act contained a provision corresponding to s. 155 of the Act and that sub-section also contained the expression "final order ". The import of this expression came up for consideration before the Gujarat High Court in Karsandas Bhagwandas Pak v. G. V. Shah, ITO [1975] 98 ITR 255. The view taken was that the final order for the purpose of s. 35(5) means the order which makes the final assessment on the assessees. A proceeding for rectification o ..... 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