TMI Blog2018 (3) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred by the assessee in the capacity of proprietor for AY 2007-08 has completely been set-off in AY 2008-09 and the same is, undisputedly, in order. Loos set-off to the partner in individual capacity - Held that:- The assessee was admitted as partner of the firm since 22/10/1968 and continued as partner up-to 22/09/2006 when the other partner of the firm (assessee’s brother) died and the firm was continued as proprietorship concern of the assessee. Therefore, we do not find any strength in the argument that it is a case of succession by inheritance since nothing has been inherited by the assessee rather he was already a partner in the firm since inception stage of the firm. Hence, on factual matrix, we find that the assessee’s share in the losses of the erstwhile firm belonged to that firm only and could not be set-off by assessee in individual capacity. - I.T.A. Nos.1379 &1380/Mum/2017 - - - Dated:- 23-3-2018 - Shri C.N. Prasad, JM And Shri Manoj Kumar Aggarwal, AM Revenue by : N. Hemalatha, Ld. DR Assessee by : Dharmesh Shah,Ld.AR ORDER Per Manoj Kumar Aggarwal (Accountant Member) 1. The captioned appeals by assessee for Assessment Year [AY] 2009-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidences including loss returns of earlier years, the same was denied to the assessee. Aggrieved, the assessee carried the matter before Ld. CIT(A). 3.2 The Ld. CIT(A) noted that the correct figures of brought forward losses was ₹ 26,93,383/-. The Ld. CIT(A), on page numbers 3 to 5 of the impugned order, noted the constitution / re-constitution history of an erstwhile firm namely Babubhai Narottamdas Co. and noted that w.e.f. 22/09/2006, the assessee carried on the business of the said firm as sole surviving partner / proprietor as well the agent of court receiver. The financials of the firm were prepared on 22/09/2006 and the total loss arising from the business was determined and the business was taken by the assessee who filed return of income in the capacity of proprietor for the balance period of six months of FY 2006-07 under his own individual name. The total loss so determined up-to 22/09/2006 was ₹ 42,72,212/- and accordingly the assessee s 50% share therein came to ₹ 21,36,108/-. After adding further loss of ₹ 5,55,990/- incurred by the assessee after 22/09/2006, the total loss thus worked out to ₹ 26,92,096/-. The set-off of the same ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e since nothing has been inherited by the assessee rather he was already a partner in the firm since inception stage of the firm. Hence, on factual matrix, we find that the assessee s share in the losses of the erstwhile firm belonged to that firm only and could not be set-off by assessee in individual capacity. Our view is duly supported by the judgment of Hon ble Delhi High Court rendered in Pramod Mittal Vs. CIT [19 Taxmann.Com 24] wherein the matter has been adjudicated by the Hon ble court in the following manner:- 3. We have considered the contentions raised by the petitioner but do not find any merit in the same. Partnership firm is a separate and distinct unit of assessment. The petitioner and his brother constituted a partnership firm, which was dissolved w.e.f. 18.9.2004. The partnership firm will have to be assessed on the income for the period 1.4.2004 to 18.9.2004. After the dissolution of the partnership firm, it ceased to exist. The petitioner in terms of the dissolution deed became entitled to fixed assets, current assets and liabilities of the firm. The other partner was paid the current account balance and capital balance standing to his credit. After 18.9.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to business otherwise than on death. (1) Where a person carrying on any business or profession (such person hereinafter in this section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession, - (a) the predecessor shall be assessed in respect of the income of the previous year in which the succession took place up to the date of succession; (b) the successor shall be assessed in respect of the income of the previous year after the date of succession. 8. Section 170(1) is very lucid and clear. The partnership firm has to be assessed in respect of profit and gains from the business for the period up to 18th September, 2004. After the said date and after the partnership firm was dissolved, the sole proprietor has to be assessed in respect of profits and losses. The income earned by the appellant, as an individual, would include his share of loss as an individual but not the losses suffered by the partnership firm. The losses suffered by the partnership firm cannot be set off from the income of the appellant as an individua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the erstwhile proprietorship concern of the father was carried on by the legal heirs by forming partnership firm and the Hon ble court held that firm could claim carry forward of loss of sole proprietor as it was found by Tribunal that there was succession to business of deceased. Therefore, the same being factually different, could not be applied to the facts of the case. Resultantly, this ground of assessee s appeal stands dismissed. 3.7 The assessee s appeal ITA No. 1380/Mum/2017 stands partly allowed for statistical purposes. Now, we take up ITA 1379/Mum/2017 4. By way of this appeal, the assessee contest the order of order of Ld. Commissioner of Income-Tax (Appeals)-42 [CIT(A)], Mumbai, Appeal No.CIT(A)-42/IT-221/13-14 dated 06/10/2016 qua confirmation of certain additions. The assessment for impugned AY was framed by Ld. Income Tax Officer -24(3)(4), Mumbai [AO] u/s 143(3) read with Section 148 of the Income Tax Act,1961 on 15/01/2014 wherein the assessee has been saddled with further additions of ₹ 14,12,500/-. The same, upon confirmation by first appellate authority, is being contested before us. 5. The Ld. AR pointed out that the assessee could n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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