TMI Blog1975 (12) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... r 1959-60, they were successful in getting the contract and made a profit of Rs. 14,676. The assessee included its half share of Rs. 7,338 in this profit in its total income. The Income-tax Officer treating the assessee and M/s. N. K. Perianna Nadar as an unregistered firm of partnership in respect of their contract for the supply of salt to M/s. West Coast Salt Fisheries Department at Mangalore included the sum of Rs. 7,338 in the total income. The assessee's contention that the contract taken by the assessee and the other firm was a joint venture was not accepted by the Income-tax Officer. This view was also confirmed by the Appellate Assistant Commissioner and the Tribunal. In the assessment year 1960-61, the two firms did not succeed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or carrying on a contract business and that this larger entity consisting of two firms must be treated as an association of persons. On the ground that the prohibition contained in section 77 is applicable only in respect of the income or loss of an unregistered firm and that there is no express prohibition in the Income-tax Act against the set-off of loss in the business carried on by an association of persons, the Appellate Assistant Commissioner allowed the claim of set-off for the share of loss of the business carried on by the assessee as an association of persons. The department filed an appeal against this order before the Income-tax Appellate Tribunal. Before the Tribunal, the department conceded that the business carried on by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the proportionate part of the loss of an individual member of the association could not be set off by him or that member against his or its other income. He also referred to section 86(v) which provided that even in a case where such association of persons makes a profit, though the proportion of the amount which a member of the association is entitled to receive is to be included in computing the total income of such person, no income-tax was payable by the assessee in respect of that portion of the amount. He also argued that section 70 which allowed a set-off of the loss incurred in respect of one source of business against his income from any other sources under the same head could be invoked only when there is an identity, so to say ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of any assessment year, the net result of computation under any head of income is a loss, he shall be entitled to have that amount of such loss set off against his income, if any, assessable for that year under any other head. Thus, while section 70(1) provided for the set-off of loss from a source falling under the same head, section 71 provided for set off of loss under any other head of income. The set-off allowed under section 70(1) is subject to the saving clause in the same section which reads " save as otherwise provided in this Act ". That in our opinion has reference to section 77 where there is a prohibition against set-off in case where the loss is incurred by an assessee as a partner of an unregistered firm or where the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in Anglo-French Textile Co. Ltd. v. Commissioner of Income-tax [1953] 23 ITR 82 (SC), which was also a case arising under the old Act. These decisions were followed by the Andhra Pradesh High Court in Smt. Abida Khatoon v. Commissioner of Income-tax [1973] 87 ITR 627 (AP), where the learned judges differing from the decision of the Calcutta High Court in Ganga Metal Refining Co. v. Commissioner of Income-tax [1968] 67 ITR 771 (Cal) held that since the charge of tax is on the total income and income-tax is a single tax and not a collection of taxes, a loss from any source in a year may be set off against the income from any other sources in that year and there was no prohibition preventing a member of the association of persons from set ..... X X X X Extracts X X X X X X X X Extracts X X X X
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