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C.I.T Versus M/s. RS Avtar Singh And Others

2015 (8) TMI 769 - DELHI HIGH COURT

Share of the loss of the AOP claimed as business loss - setting off of the above loss of the joint venture against the profit of the Assessee as a business loss by the AO reversed by CIT(A) on the ground that the AO could have computed the loss of the AOP only after the AOP filed its own return - AO’s action was held to be without jurisdiction and prejudicial to the interest of the Revenue BY CIT(A) - The ITAT by its order reversed the order of the CIT (A) and held in favour of the Assessee - wh .....

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Section states that unless the AOP is chargeable to tax on its total income at the maximum marginal rate, the share of member computed in terms of Section 67 (A) shall form part of its total income. However, there is no corresponding provision for setting off of a member’s share of the losses of the AOP against his personal income.

In the instant case the CIT (A) was right in reversing the decision of the AO to set off the Assessee's share of the loss of the joint venture against the .....

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for its opinion by the Income Tax Appellate Tribunal ( ITAT ) as per the Statement of Case dated 18th July 2001 reads as under: "Whether on the facts and in the circumstances of the case the Tribunal was right in law in holding that the order passed by the Assessing Officer on 31.12.1990 in respect of the assessee was neither erroneous nor prejudicial to the interest of the Revenue." 2. The Assessee firm entered into a joint venture with M/s Unitech Limited as an association of person .....

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nses, and, fixed the Assessee s share of the loss at ₹ 5,76,943 which was allowed as business loss. The CIT (Appeals) [ CIT (A) ] by an order dated 25th March 1992 reversed the setting off of the above loss of the joint venture against the profit of the Assessee as a business loss by the AO on the ground that the AO could have computed the loss of the AOP only after the AOP filed its own return. The AO s action was held to be without jurisdiction and prejudicial to the interest of the Reve .....

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the Income Tax Act, 1922 noticed that while Section 3 of the 1922 Act provided that in respect of the total income of an AOP the income tax could be charged "either on the AOP or the members of the AOP individually, Section 4 of the 1961 Act did not contain any such option." Under the latter provision, "if it is the income of the AOP, then the AOP along has to be taxed. The members of the AOP cannot be taxed individually in respect of the income of the AOP". It was held that .....

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lanatory notes to the amendments introduced by the Direct Tax (Amendment) Act, 1987 which, inter alia, inserted Section 67-A. The said Explanatory note reads as under: "11.6 Provisions of new section 67A.- The new section 67A, which has sub-sections (1) to (3) and an Explanation, provides for the method of computing a member s share in the income of an association of persons or body of individuals wherein the shares of the members are determinate, in the same manner as provided for in secti .....

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