Law:

Section:

Section 71 of the Income-tax Act, 1961 - Losses - Set off of from one head against income from an other - Assessment year 1966-67 - Whether assessee can set off his/her share of loss in business carried on by AOP against his/her income under other heads - Held, yes FACTS The assessee owned a share in a factory which was being assessed to income-tax as an association of persons. During the relevant assessment year, the said factory incurred a loss. The assessee claimed to set off his share of loss under the head "Business" against her other income derived from other sources under the heads "Income from house property" and "Income from securities". Her claim for a set-to-off was rejected by the ITO the AAC and the Tribunal. On reference : HELD Income received by a person as his share from an association of persons is not included in Chapter III and, therefore, it is not to be excluded from the person's total income. Chapter IV deals with computation of total income. For the purposes of charge of income-tax and computation of total income, section 14 (which occurs in Chapter IV) classifies all income under six heads; A.-Salaries. B-Interest on securities, C.-Income from house property. D.-Profits and gains of business or profession, E.-Capital gains and F.-Income from other sources. It is elementary that the classification of all income under six heads does not have the effect of making the income under each head separately liable to tax. Income-tax is a single tax on the total income and not a collection of distinct taxes on the income under the several heads or on the income from different sources. Since the charge of tax is on the total income, a natural corollary of the principle that income-tax is a single tax and not a collection of taxes is that a loss from a source under any head in a year may be set off against income from another source under the same head in that year and so also a loss under any head in a year may be set off against the income under any other head in that year. It is seen that section 70(1) provides for set-off of loss from a source falling under any head of income against the assessee's income from any other source under the same head…

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