TMI Blog2007 (4) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... For that the learned Commissioner of Income-tax (Appeals) has erred in not adjudicating the grounds regarding charging of interest under sections 234B and 234D amounting to Rs. 1,86,331 and Rs. 1,382. (iv) For that interest under section 234D amounting to Rs. 1,382 could not be charged as the law has been inserted post the year under consideration." 2. The main grievance of the assessee is that the Assessing Officer has not allowed carry forward and set-off of losses of the firm. The facts of the case are that the assessee has shown income from business and other sources amounting to Rs. 13,22,068. He claimed set-off of losses of earlier years amounting to Rs. 40,00,529. After declaring, nil income, the difference was carried forward to the next year. The assessee was a partner in a partnership firm, viz., Pooja Enterprises till 31-12-1998. There were three partners in the firm. It was dissolved with effect from 1-1-1999 and was converted into a proprietary concern of Shri Pratap H. Desai (HUF) with effect from 1-1-1999. It is the loss of the partnership firm which is sought to be set-off against the profit of the proprietary business in subsequent years. The Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer by holding that the decision of the Supreme Court in the case of Madhukant M. Mehta would not provide any cover to the case of the assessee. 4. Before us, the learned authorised representative of the assessee submitted that the case of the assessee would be covered by section 75 wherein it is provided that loss of the firm can be set-off against the income of the partner. The name of the concern remains the same. It is the same business which is being carried out on the same place by the remaining partner. It is practically the same entity. Therefore, the loss of the firm should have been allowed to be set-off against the income of the succeeding firm which is controlled by individual partner. The learned authorised representative for the assessee also submitted that the case of the assessee is covered by the decision of the Hon'ble Supreme Court in the case of Madhukant M. Desai. 5. Against this, the learned departmental representative submitted that the decision of the Hon'ble Supreme Court in the case of Madhukant M. Desai would not be applicable as in that case there was a succession by inheritance. Further, section 75 would not be applicable to the facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss in earlier years is entitled to carry forward and set-off the same against his future income. It is not in dispute that firm and the individual are two distinct entities and it is also not in dispute that the loss was incurred by the firm which is now being set-off against the income of HUF. Prior to 1-4-1993, i.e., for the assessment year 1992-93 and earlier assessment years section 158 provided that the Assessing Officer shall notify to the firm by order in writing the amounts of his total income assessed and the apportionment thereof between the partners. Section 75 provides that where the loss of the firm was apportioned amongst the partners and pertaining to an assessment year 1992-93 or before and was apportioned amongst the partners and the partners could not set-off such loss against his income then such loss shall be allowed to be set-off against the income of the firm subject to the condition that the same partner continued in the said firm. In this regard it would be relevant to quote section 75 which stands as under: Losses of firms "Where the assessee is a firm, any loss in relation to the assessment year commencing on or before 1-4-1992, which could not be se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set-off would not be available. The assessee in the hands of the partner and the firm are separate and distinct. 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 firm. Thereafter it is only the individual partner, who has to be assessed. This view is made clear by virtue of the provisions of section 182(3) which contemplates an assessment in the hands of the firm in respect of the share of a partner who is a non-resident. It cannot be said 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. There may be individuals, who are partners in many firms and some of the firm may make profits while some of the firm may suffer loss. If the benefit of the 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 the assessment is contemplated. Here the loss to be carried forward and set-o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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