TMI Blog1969 (2) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... Morthad, brought forward from the assessment year 1955-56 against his other business income for the assessment year 1956-57 ? " The assessee is an individual whose only sources of income were his shares in several partnership concerns. Apart from the firms which carried on other businesses there were two firms which carried on the business in bidi leaves. The first was styled as M/s. A. Dharma Reddy, Morthad. The second firm was called A. Dharma Reddy and Co., Ditchpally. The first partnership was dissolved on March 31, 1955, but the second one continued during the assessment year 1956-57. During the assessment year 1955-56 the assessee sustained a loss of Rs. 30,255 in the first firm. As he was carrying on several other businesses, after the necessary set-off, the total loss sustained by him for that year came to Rs. 24,532. During the assessment year 1956-57 the assessee's profit in the second firm was estimated at Rs. 11,853 and his total taxable income was assessed at Rs. 28,758 for that assessment year. As the assessee carried on business in bidi leaves during that year he claimed that the loss sustained by him in the previous year, viz., assessment year 1955-56, should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss for the assessment year 1955-56. He carried on the same business in beedi leaves during the accounting year 1955-56, i.e., the assessment year 1956-57, though in partnership with others. Entering into partnership with another in one case and three others in the other case was only the mode of carrying on business, but the business is the same business, viz., trade in beedi leaves. Section 24(2)(ii) does not require that the business should be continued to be carried on for the assessment year in question by the same concern or partnership or firm as in the previous year when the loss was originally sustained by the assessee. The only condition prescribed by that clause is that the same business must be continued to be carried on by 'him' (the assessee). " In order to dispose of the contentions of the learned counsel for the Income-tax Commissioner who is the appellant before us it is necessary to set out the relevant statutory provisions. Before the amendment made by the Finance Act of 1955, section 24(2) was as follows : " (2) Where any assessee sustains a loss of profits or gains in any year, being a previous year not earlier than the previous year for the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the amendment made by the Finance Act, 1955, the assessee should carry on the same business in the year of assessment. The change in the language of the provision substituted by the Amending Act is significant and all that the assessee has to show is that the business in which loss was originally sustained continued to be carried on by him in the assessment year. Now, in the present case, the assessee carried on the business in bidi leaves apart from other businesses. This business he was doing in partnership with another person. Nevertheless the business was of taking contracts in respect of or dealing in bidi leaves. This business he could do either individually or in partnership with someone else. If the first partnership was dissolved it did not mean that his business in bidi leaves came to an end so long as he continued to do that business either individually or in partnership with others. During the assessment year in question he was admitted, carrying on that business in partnership with three others. It could well be said that, even according to the provisions of section 24(2) as they stood before the amendment made by the Finance Act of 1955, he continued to carry on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of section 24(2)(ii) does not change by reason of the change in persons who carry on that business since it continues to be carried on by the same individual. The Kerala High Court in Dwarakadas Leeladhar v. Commissioner of Income-tax held that where a registered firm which was working at a loss was dissolved and one of the partners continued the same business as a sole proprietor he was entitled to set off his share of the loss incurred by the firm against the profits accruing to him from the business as a sole proprietor. The Delhi High Court in S. Narain Singh v. Commissioner of Income-tax had to deal with a case where an assessee had taken certain liquor contracts and carried on the business of sale of liquor in his individual name and sustained losses. Subsequently, he carried on the same business with 10 other persons and sought to set off the previous losses against the profits made in the accounting year. Referring to the meaning and construction of the words " same business " as they stood in section 24(2) before the amendment made by the Finance Act of 1955, it was held that the assessee was entitled to carry forward the losses for the previous year and hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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