TMI Blog1973 (9) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... l demand for raw magnesite, the assessee-company sought the cancellation of the lease granted in favour of Messrs. Amalgamated Commercial Traders Private Limited, the lessee, and actually terminated the lease after paying compensation to the sum of Rs. 3,15,000 to the lessee and obtained the surrender of the lease on August 7, 1958. In the meanwhile, the assessee-company entered into a partnership with effect from April 1, 1956, with Orissa Cement Company Limited and Dalmia Cement Company Limited under the name and style of Dalmia Magnesite Corporation. The object of this partnership was the manufacture of dead-burnt magnesite where the process of calcination is carried out at higher temperature. The said sum of Rs. 3,15,000 which was paid as compensation to the lessee by the assessee for getting the surrender of the lease, had been borrowed from Dalmia Cement (Bharat) Limited. In addition, a further sum was also borrowed from them for settling the assessee's liabilities to others. Out of the borrowings made by the assessee, a sum of Rs. 1,00,000 was deposited in call deposits with banks. The assessee-company, for the first time, filed its returns for the previous years relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer again rejected the claim for the same reasons as set out by him in respect of the assessment years 1960-61. For both the assessment years 1960-61 and 1961-62, the firm, Dalmia Magnesite Corporation, of which the assessee is a partner, claimed that it was a new unit of industrial undertaking and, therefore, it claimed the relief under section 15C. This claim has been allowed in the assessment of the firm for those years. Based on this, the assessee claimed that it was entitled to an exemption under section 15C in respect of its share income from the firm. But this claim came to be made at the appellate stage when the assessment orders for the years 1960-61 and 1961-62 were pending in appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner dealt with the three claims put forward by the assessee-company. In relation to the claim for exemption under section 15C, the Appellate Assistant Commissioner took the view that as the relief has been granted to the firm, the same relief is not available to the partners in respect of their share income and in that view, he directed the Income-tax Officer to find out whether the firm had been granted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee-company was not entitled to carry forward the losses of these years and to set off, and that the Tribunal dealing with the appeals relating to the years 1960-61 and 1961-62 cannot direct the quantification of the losses in respect of those three earlier years. One other issue raised by the assessee before the Tribunal was as to whether a sum of Rs. 41,676 which is the quantum of loss arising out of the depreciation in the value of stock-in-trade of magnesite ore for the assessment year 1961-62 is deductible as against the share income from the firm. Though this claim was negatived by the authorities below, the Tribunal upheld this claim on the ground that the said losses have been incurred directly from the business of the assessee and that the assessee's business from which the share income has been received is the same in respect of which the loss also has arisen. Aggrieved by the decision of the Tribunal, the revenue sought a reference to this court and the following six questions have been referred in respect of the said two assessment years : " 1. Whether, on the facts and in the circumstances of the case, the assessee was entitled to the deduction of interest an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction in the hands of the partner as against his share income (vide Commissioner of Income-tax v. Ramniklal Kothari and Commissioner of Income-tax v. A. M. Kaithan ). Therefore, the extreme contention of the revenue that the entire expenditure in respect of which the deduction is claimed cannot be claimed as against the assessee's share income from the firm cannot straightaway be accepted without a scrutiny as to whether the expenses had been incurred in connection with the earning of the share income by the assessee from the firm. As already stated, the Tribunal having left the question of deduction to be considered by the Income-tax Officer, we think it is sufficient to say that the Income-tax Officer, while considering the assessee's claim for deduction in respect of interest and other expenses, will consider as to what are the actual expenses incurred by the assessee for earning the share income and to allow the same under section 10(2)(xv) following the decisions above referred to. We, therefore, answer the question, technically, in favour of the assessee but subject to the observations made above. Question No. 3 relates to the jurisdiction of the Tribunal to direct the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l before it must deal with us of law and fact which arise out of the order of assessment made by the Income-tax Officer and the order of the Appellate Assistant Commissioner. It cannot assume powers which are inconsistent with the express provisions of the Act or its scheme." But we are of the view that this general observation of the Supreme Court relating to the jurisdiction of the Tribunal may not be of much assistance for deciding the questions before us. On the facts of this case, it cannot be said that the Tribunal has exceeded its jurisdiction in directing the Income-tax Officer to quantify the losses in relation to the assessment years 1952-53 to 1954-55 and to allow a set-off of the losses for those years in relation to the assessment years 1960-61 and 1961-62. The Tribunal while disposing of the appeal relating to the assessment years 1960-61 and 1961-62 has to actually determine the taxable income of the assessee for them years and for this purpose it has necessarily to find out whether the assessee is entitled to carry forward the losses and set them off against the profits of the years in question. If, in law, the assessee is entitled to carry forward and set off th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Tribunal in this case, while dealing with the assessment for the years 1960-61 and 1961-62 is justified in directing the Income-tax Officer to determine the losses in relation to the assessment years 1952-53 to 1954-55 for the purpose of granting relief to the assessee under section 24(1) and section 24(2) in relation to the assessment years in question. The third question is, therefore, answered in the affirmative and against the revenue. Questions Nos. 2 and 4 relate to the merits of the assessee's claim to have the losses of the earlier years 1952-53 to 1959-60 set off against the assessee's share income from the firm, Dalmia Magnesite Corporation, for the assessment years 1960-61 and 1961-62. According to the revenue, the losses incurred by the assessee for the assessment years 1952-53 to 1959-60 and the share income of the assessee are not from the same business and, therefore, the claim for carry forward and set-off of the losses is not admissible. In support of its plea that the losses have been incurred in connection with a different business, the revenue urged before the Tribunal that the earlier proprietary business carried on by the assessee was of mining the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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