TMI Blog1959 (6) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... carry on the business in equal partnership. Hiralal died on August 14, 1953, without leaving a will. He had no children. Jayantilal took the wife of Hiralal as his equal partner under a deed of partnership dated 16th August, 1953. The assessee's accounting year is S. Y. ending with Diwali 1954 and the assessment year is 1955-56. 3. In the assessment year 1953-54, when Hiralal was alive the partnership suffered heavy losses. Hiralal's share of the loss amounted to ₹ 1,07,420. This loss was carried forward as provided under the law. In the following assessment year, i.e., 1954-55 also, the firm suffered a loss. Hiralal's share of the loss for the assessment year 1954-55 was ₹ 1,620. Assessment was made for the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the deceased. She has, therefore, in our opinion, succeeded by inheritance to the share in the partnership. The order of the Tribunal is annexure A and forms part of the case. 6. The following question of law arises out of the aforesaid order of the Tribunal: Whether on the facts and circumstances of the case the assessee is entitled to claim a set-off of the assessable profits against the losses suffered by the assessee's husband in the assessment years 1953-54 and 1954-55 under section 24(2) of the Income-tax Act ? 7. Parties accept the statement of the case. The partnership deeds dated July 18, 1952, and August 16, 1953, are made part of the case at the request of the departmental representative. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee Bai Mani under section 24(2) of the Income-tax Act. In respect of the share of loss suffered during the lifetime of Hiralal, Bai Mani claimed in the assessment proceedings that she had by inheritance succeeded him in the constitution of the firm and, therefore, his share in the loss was liable to be set off against the income, profits or gains of the business for the assessment year 1955-56. The Income-tax Officer negatived that contention and the Appellate Assistant Commissioner confirmed that order. The Tribunal, however, held that the share of Hiralal was given to Bai Mani and that it had devolved on her as she was the legal heir of Hiralal and that she had succeeded by inheritance to his share of the partnership. On that view th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to him under the said clause (b), and where any person carrying on any business, profession or vocation has been succeeded in such capacity by another person, otherwise than by inheritance nothing in this section shall be deemed to entitle any person other than the person incurring the loss to have it set off against his income, profits of gains. Evidently, there has been change in the constitution of the firm Hiralal Mathuradas and the losses in the year before the date on which the constitution of the firm was altered cannot be set off against the profits of the subsequent years unless the person carrying on the business, i.e. Hiralal, has been succeeded in such capacity by another person by inheritance. Therefore, the sole question t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the business of the partnership was continued and a fresh partnership agreement was executed on August 15, 1953, where under the business conducted in the name of Hiralal Mathuradas was conducted in partnership between Jayantilal and the assessee Bai Mani. On these facts, the Tribunal has come to the conclusion, especially having regard to the quantum of interest which Hiralal had, and the extent of capital which he had brought into the partnership and the relation which subsisted between Hiralal and Jayantilal and the conduct of the two partners Jayantilal and Bai Mani that the latter had succeeded to her husband Hiralal in his capacity as a partner by inheritance. In our view, the Tribunal's conclusion is one on a question of fac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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