Law: Income Tax Act, 1922

Section: 23(5)(a),23(3),58,3,7,8,15,15A,19,20,58G ,58F,41,24(2),24

Income-tax Act, 1922 -- Sections 23(5)(a), 24 -- Loss suffered by a registered firm in the earlier year when super-tax on firm was leviable -- Whether loss can be carried forward -- Held no -- JUDGMENT (The Judgment was delivered by M. Ameen, Member).-There is only one objection in this appeal. It has been expressed in the following words: That the Appellate Assistant Commissioner is wrong to suppose that loss suffered by the appellant during the previous year of assessment does not stand over to be carried forward and set off from the income of the appellant when it is assessed as a separate taxable unit for super-tax purpose and to confirm the assessment thereof. 2. The assessment for 1956-57 of Messrs. S. and sons was made on a total income of Rs. 82,925. The Income-tax Officer assessed the registered firm under section 23(3) read with section 23(5)(a) for 1956-57 at "no demand" except for super-tax. In the preceding tax year, namely, 1955-56 the net loss of the firm was determined at Rs. 2,07,664. This loss was apportioned between the three partners of the firm. Section 23(5)(a) before this was amended by section 11 of the Finance Ordinance of 1955 stood as below: "when the assessee is a firm and the total income of the firm has been assessed under sub-section(1), sub-section(3) or sub-section(4) as the case may be, in the case of a registered firm, the total income of each partner of the firm, including therein his shares of its income, profits and gains of the previous year, shall be assessed and the sum payable by him on the basis of such assessment shall be determined; Provided that if such share of any partner is a loss it shall be set off against his other income of carried forward and set off in accordance with the provisions of section 24,,," There are other provisos also, but these are not relevant in this connection. By the amendment of the Finance Ordinance of 1955 the words were altered in the following way: "in the case of a registered firm, super-tax but not income-tax, payable by the firm itself shall be determined and the total income of each partner of the firm" The other words remained unaltered except for a single word "also" placed…

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