Law: Income Tax Act (XI of 1922)

Section:

Income-tax Act (XI of 1922), Ss. 10 & 24 (1)-Loss-Set-off- Loss in foreign partnership-Whether can be set-off against profits of Indian business-Scope of Ss. 10 and 24.   Where an individual who is ordinarily resident in India and carries on business in India, is also a partner of a firm carrying on business outside India, he is entitled to set-off the loss incurred by him as a partner of the foreign business, against the profits and gains of the business carried on in India. The second proviso to section 24 (1) of the Income-tax Act, 1922 is not applicable to such a case.   Though the profits of each distinct business may have to be computed separately, the tax is chargeable under section 10; not on the separate income of every distinct business, but on the aggregate of the profits of all the businesses carried on by the assessee. Therefore, where the assessee carries on several businesses, he is entitled under section 10, and not under section 24 (1), to set-off losses in one business against profits in another. If section 24 (1) has no application the second proviso thereto can also have no application. Further, the second proviso to section 24 (1) applies only where the assessee is an unregistered firm.   Rm. Ar. Ar. Rm. Arunachalam Chettiar v. Commissioner of Income-tax (1936) 4 I T R 173 (P C) and Commissioner of Income-tax v. Indo-Mercantile Bank Ltd. (1959) 36 I T R 1 (S C) applied.   Muthuraman Chettiar v. Commissioner of Income-tax (1957) 31 I T R 61 affirmed.  JUDGMENT   S. K. DAS J.-These two consolidated appeals raise a common question of law arid have been heard together. The Commissioner of Income-tax, Madras, is the appellant in both the appeals. P. M. Muthuraman Chettiar, manager of a Hindu undivided family, is the respondent in Civil Appeal No. 429 of 1960 and S. Abdul Shakoor is the respondent in Civil Appeal No. 430 of 1960. We shall refer to the respondent in each of these two appeals as the assessee.   The short facts giving rise to the two appeals are these. The assessee in Civil Appeal No. 429 of 1960 is a Hindu undivided family consisting of a father and his minor son. The assessee carried on…