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2014 (2) TMI 1108 - AT - Income TaxSet off of loss u/s 70(1) of the Act - Whether the assessee being partner in a partnership firm is entitled to set off the loss of firm qua his share (unabsorbed depreciation) against his other business income (in individual capacity) as per the provisions of section 70(1) of the Act – Held that:- AO held that the partnership firm is a separate entity and the assessee who is a partner cannot claim depreciation on the asset of the firm in view of the provision of section 32 of the Act, while computing his individual income - the AO disallowed the claim of unabsorbed depreciation while computing the income of the assessee - The Apellant is not justified in setting off proportionate share of unasborbed depreciation of his partnership firm from his income. If the partners have got other than the share income from that firm, such allocated depreciation shall be set off against their respective income of that year from any other source - But with amendment in provisions of the Act as regards to taxation of firms w.e.f. 01.04.1993 i.e. for and from AY 1993-94 the concept of registered firm was abandoned and it is the same position as a member of AOP or BOI that of the partner of the firm - The profits of partnership firm are itself taxed and whatever remains will be distributed among partners to the extent of proportion of their shares as tax free share – The decision in ITO Vs. Ch. Atchaiah [1995 (12) TMI 1 - SUPREME Court] relied upon - The firms as assessed u/s. 184 and 185 of the Act w.e.f. 01.04.1993 because the profit of the firm is taxed in the hands of the firm and share of the partner is never taxable in their individual assessment – thus, the assessee is not eligible to claim unabsorbed depreciation of the firm against incomes of the assessee who is partner of the firm and assessed in individual capacity – Decided against Assessee.
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