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TMI Blog1967 (2) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ee claimed that he was entitled to carry forward and set off the losses assessed in the assessment years 1949-50 and 1950-51 to the extent of Rs. 20,414 against his share of the profits from the registered firm assessable in the assessment year 1951-52. The Income-tax Officer rejected the claim of the assessee, but the Appellate Assistant Commissioner in appeal allowed the same. The Income-tax Appellate Tribunal, on an appeal by the revenue, decided that there was no identity between the business which was carried on by the assessee alone in the assessment years 1949-50 and 1950-51 and the business which was carried on by the partnership in the name of Dulat Ram Hans Raj and Co. and, consequently, the assessee was not entitled to carry forward the losses. At the instance of the assessee, the Income-tax Appellate Tribunal stated the case to this court and referred the following question of law : " Whether the loss of Rs. 46,619 and Rs. 4,892 determined for the assessment years 1949-50 and 1950-51, respectively, in the above circumstances can be set off against the share of income of Rs. 20,414 determined in the assessment year 1951-52 ? " The parties were in agreement as to the te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am Jain v. Commissioner of Income-tax on that ground. Considerable arguments have been addressed at the Bar about the tests to be adopted in determining whether the two businesses are the same or not and I shall revert to that a little later. As I look at the problem, it is not so much about whether or not the assessee was carrying on the same business in all the three years but whether the fact that, in the assessment years 1949-50 and 1950-51, the assessee carried on liquor contracts in his own name, while in the year 1951-52, his profit consisted of his share in a registered firm which carried on the same business, viz., liquor contract, makes any difference. I say so because in all the three years the nature of the business was the same ; and it is the contention of the revenue that, since the source of income in the year 1950-51, was different, that renders section 24(2) inapplicable. Mr. Kirpal, the learned counsel for the revenue, founded an argument on the ground that each contract for liquor was a yearly contract required to be obtained afresh after the expiry of each year and that by itself rendered the two businesses as different. I would straightaway say that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss in accordance with the provisions of section 24(2) against his income in a subsequent year. No such right of carry forward exists in a case of a registered firm since the loss is apportionable among the individual partners. This provision seems to be based on logic, inasmuch as there was no point in conferring a right on a registered firm to carry forward, as such a right will then not coincide or be in accord with the principle of apportionment of losses among the individual partners. In that situation, it would be completely devoid of logic to hold that, if otherwise the business in two years is the same, a partner, suffering a loss in his individual capacity, cannot be allowed to set it off against his share of profits in a registered firm. That would result in this that though under section 24(1) read with section 24(2) a partner alone can carry forward and set off his share of losses against his income in the subsequent year, yet that benefit cannot be availed of by a partner in his individual capacity because the business in the two years, on the process of reasoning advanced by the revenue, can never be the " same ". Consistent with the principle of apportionment, it m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. It was observed whether two or more lines of business may be regarded as the 'same business' or 'different businesses' depends not upon the special methods prescribed by the Income-tax Act for computation of the taxable income, but upon the nature of the businesses, the nature of their organisation, management, source of the capital fund utilised, method of book-keeping and a host of other related circumstances which stamp them as the same or distinct. " Mr. Kirpal also sought aid from those authorities in support of the proposition that this court should not reverse a finding of fact arrived at by the Tribunal. In answering the question in favour of the assessee, I am not disturbing any finding of fact, but I am only applying law to the facts found and, consequently, this case falls out of the category of casts which depend merely on a finding of fact. All the English cases referred to merely endorsed the finding of fact arrived at by the Commissioners on the ground that there was evidence in support of the finding. In the case of Morning Post Ltd. the decision was based on a further fact that the company's activity after 1st October, 1937, to receive the sums due under the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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