9911796707
TMI Blog1988 (7) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... yr. 1967-68. (2) She became partner in M/s Dharmanath Corporation w.e.f. 1st Oct., 1973 vide deed of partnership dt. 16th Oct., 1973. (3) On 20th March, 1974, the aforesaid firm filed application for registration under ss. 184/185 of the Act, in Form No. 11 for the asst. yr. 1975-76 corresponding to the previous year S.Y 2030 (17th Oct., 1973 to 13th Nov., 1974). (4) From Nos. 11 & 11A were filed by the aforesaid firm on 11th Nov., 1974 with a deed of partnership dt. 3rd July, 1974 as there was change in the constitution of the firm. (5) On 15th May, 1975, the aforesaid firm filed return for the asst. yr. 1975-76 declaring loss of Rs. 1,29,591. (6) No action appears to have been taken by the ITO in the case of the aforesaid firm. (7) For the asst. yr. 1976-77, the aforesaid firm filed return declaring loss of Rs.96,761 along with From No. 12 for continuation of registration. (8) On 29th March, 1979, the ITO assessed the aforesaid firm in the status of registered firm on a total loss of Rs. 90,000. Under s. 158 of the Act, he determined the assessee's share of loss in the said firm of Rs. 81,000. (9) On 31st July, 1976, during S. Y. 2032, the aforesaid firm was dissolved an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss in name of Dharmanath Corporation for. Y. 2034 as per copy of profit and loss a/c enclosed 1,51,971 (b) Loss in business in name of Weyburne Pharmaceuticals. No purchase or sale done during the year. As per information and details given in past years the stock is lying pledged with Bank which is deteriorating. Hence loss on deterioration is claimed as under : Opening stock as per details given last year 48,000 Less : Estimated deterioration @ 20 per cent of stock with Bank 9,600 Balance stock 38,400 . 9,600 1,42,371 Less : Out of the total loss of Rs. 2,14,176 as per details given in note below, Rs. 1,42,371 is claimed as set off and Balance Rs. 71,405 is claimed as carried forward 1,42,371 Nil Total Income Nil ..Note: 1. Loss for asst. yr. 1974-75 as per assessment order dt. 24th March, 1981 as per self A.O. Rs. 43,360 2. Loss for asst. yr. 1975-76. Share of loss from M/s Dharmanath Corpn. as per return filed but no assessment made Rs. 1,167,31 3. Loss for asst. yr. 1976-77 as per rectification order dt. 24th Aug., 1979 of self A.O Rs. 40,185 4. Loss for asst. yr. 1977-78 as per assessment order dt. 20th March, 1980 of self A.O. Rs. 7,000 5. Loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n had been granted registration by the Department or not. He will therefore, pass an order on merits according to the provisions of law and will give proper treatment in respect of the loss claimed by the appellant from the firm of M/s Dharmanath Corporation. This is necessary because under s. 75(1) only in the case of the partners of a registered firm can carried forward their proportionate share of loss under the provisions of s. 77(1) in the case of a non-registered firm the right of carried forward has been given in favour of the entity of that firm only. The partners of such a firm cannot carried forward the loss which has accrued in favour of an unregistered firm. 6. Subject to the above remarks the assessment is hereby set aside". It may be mentioned that the assessee had preferred appeal against the aforesaid order of the AAC without any success before the Tribunal. 7. Thereafter, on 13th Dec., 1983, the ITO framed a fresh assessment wherein he once again disallowed the assessee's claim for carry forward and set off of loss of Rs. 1,16,731 as well withdrew carry forward and set off of loss of Rs. 43,360 determined by the ITO for the asst. yr. 1974-75 with the following r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maceuticals as proprietory concern. Hence, if there is no income from this business, then naturally the loss incurred by the assessee in this business cannot be given as a set off. The assessee is only entitled to get the set off of the business loss of Rs. 43,360 which was incurred in asst. yr. 1974-75 in the business run as proprietory concern in the name of M/s Weyburne Pharmaceuticals. Had there been any income in asst. yr. 1979-80 from the same business in which this loss was incurred but during asst. yr. 1979-80, there is no such income from this business in which the so called loss has been incurred and claimed as set off. Hence, this claim of the assessee is not allowed and the same is also rejected. For this claim the assessee has also relied upon the decision of Kerala High Court in the case of Dwarkadas Liladhar vs. CIT (Ker) (1963) 47 ITR 619 (Ker). The assessee's contention is not tenable in law because the facts of the case relied upon by the assessee and the facts of the assessee's case are different from each other. Hence this claim is not allowed to the assessee." It may be mentioned that at the end of the assessment order, there are remarks to the effect of charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, in view of the said decision of the Hon'ble Supreme Court, the assessee's claim for carry forward and set off of loss of Rs. 1, 16,731 ought to have been accepted by the Income Tax Authorities. Relying on an order of the Tribunal reported in IT Appeal Reporter Vol. 6 page 463, the learned counsel for the assessee further submitted that once the assessee had shown her share of loss of Rs. 1,16,731 in the firm of M/s Dharmanath Corporation for the asst. yr. 1975-76, the ITO should have taken that figure instead of Nil taken by him--subject to rectification. In this connection, he invited our attention to s. 155(1) of the Act, with a view to impress upon us that the ITO could not have taken the share of loss from the said firm at Nil. In this connection, he submitted that even though the assessee had made an application under s. 154 of the Act before the ITO at the appropriate time, till to date, no order has been passed by the ITO on such application. 9.1 As regards withdrawal of carry forward and set off of determined loss of Rs.43,460 for the asst. yr. 1974-75, the learned counsel for the assessee submitted that since earlier order of the first appellate authority setting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed as s. 143 and as we noticed that is not a matter in controversy. May be that regular assessment may not include assessment of escaped income for "regular assessment" having been defined as one made under s. 143 or s. 144, if another provision of law enables such income and tax thereon to be determined as for instance under s. 147, that would not be an order under s. 143 or s. 144 and will not taken within the scope of the term "regular assessment." Reference to cases where the assessment orders do not fall within s. 143 or s. 144 would, therefore, be of no assistance. We respectfully dissent from the view expressed by the Andhra Pradesh High Court". Inviting our attention to para 30 of the same very judgment reported in Bardolia Textiles Mills vs. ITO the learned counsel for the assessee pointed out that the word "not" underlined above has been inadvertently not printed in the ITR. At our instance, the learned counsel for the assessee looked into the original judgment from the file of the Decree Department of the Hon'ble Court with a view to ascertain whether the word "not" under lined above is there in the judgment. After verifying the same, the learned counsel for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's case that she should have been allowed to carry forward and set off of her share of loss of Rs. 1,16,731 in the year under consideration. It is quite apparent from the records that the ITO having jurisdiction on M/s Dharmanath Corporation had failed to take any action to finalise the assessment of the said firm for the asst. yr. 1975-76 even though the said firm and its partners had complied with all the provisions of the Act, in this Regard. In view of the decision in the case of CIT vs. Biharilal Ramcharan Ltd., the Revenue cannot be allowed to take advantage of its own inaction. Apart from that, we find considerable force in the submission made on behalf of the assessee that in the assessment framed for the asst. yr. 1975-76, the ITO ought to have taken her (the assessee's) share of loss of Rs. 1,16,731 as declared by her subject to rectification instead of taking it at Nil. 11.1. On careful reading of the first order of the appellate authority. dt. 7th Feb., 1983 (reproduced above), it is quite clear that he had set aside the assessment for a limited purpose to ascertain true facts regarding the assessee's claim for carry forward and set off of loss of Rs. 1,16,731 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
