TMI Blog1995 (12) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case, the activity of becoming a partner in different partnership concerns, could not be said to be carrying on of a business by the assessee thus entitling her to the set off of the loss suffered by her in the earlier years from the firm, United Oil Mills ? (ii) Whether the assessee is entitled, under the provisions of section 72(1) of the Income-tax Act, 1961, to set-off of her share of unabsorbed losses of the earlier years from the firm, United Oil Mills, against her share of income from other partnership concerns in the assessment years 1976-77 and 1977-78 when the said firm had not been dissolved ? " The assessee-lady was having income from shares in three firms in the assessment year 1976-77, namely, Sham Sunder and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case before us, it is the admitted position that the business of United Oil Mills was not continuing in the assessment years 1976-77 and 1977-78 ". It was held by the Tribunal that from this, it follows that the assessee was not carrying on that business in the two years and the proviso to section 72(1) of the Income-tax Act clearly debars the set-off of the losses under appeals. On an application made by the assessee, the two questions of law have been referred for both the assessment years by passing a consolidated order for the opinion of this court. The contention raised by counsel for the assessee is that the assessee was carrying on the activity of becoming a partner in different partnership and, therefore, could be said to be carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 71, so much of the loss as has not been so set off or, where the assessee has income only under the head ' Capital gains ' relating to capital assets other than short-term capital assets and has exercised the option under sub-section (2) of that section or where he has no income under any other head, the whole loss shall, subject to the other provisions of this chapter, be carried forward to the following assessment year, and-- (i) it shall be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year : Provided that the business or profession for which the loss was originally computed continued to be carried on by him in the previous year relevant for that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in CIT v. A. Dharma Reddy [1969] 73 ITR 751, to contend that the assessee was entitled to claim set-off of the loss as against the profits earned in the subsequent years from the various partnership firms in which she had become a partner. In the said case, it was held by the Supreme Court that (at page 757) the " business in which the loss had been sustained by the assessee when he was a partner of the first firm which was dissolved on March 31, 1955, continued to be carried on by him in partnership with three other persons during the assessment year 1956-57, the business, as stated before, being of dealing in or entering into contracts in respect of bidi leaves." Their Lordships of the Supreme Court came to the conclusion that business c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sorbed loss may be set off against the income of the assessee against any business. The condition is regarding continuation of the same (emphasis supplied) business by the assessee to carry forward the unabsorbed business loss to be set off against the income of the assessee from any business. Clause (i) of section 72(1) provides that the loss would be set off against the profits and gains, if any of any business (emphasis supplied). In this case, the assessee discontinued its business and, therefore, would not be entitled to carry forward the unabsorbed loss in United Oil Mills to be set off against the profits earned by the assessee as a partner from the other firms. Counsel for the assessee then contended that the firm, United Oil Mill ..... X X X X Extracts X X X X X X X X Extracts X X X X
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