Law:

Section:

Section 86 of the Income-tax Act, 1961 [Corresponding to section 14(2)(a) of the Indian Income-tax Act, 1922] - Exemption - Share income, as member of AOP/BOI - Assessment year 1952-53 - While assessing income of petitioner/assessee, ITO deducted a sum of estimated share of loss of petitioner in a firm in expectation that firm would be treated as registered firm in its assessment - However, at time of assessment, firm was treated as unregistered firm - ITO, thus, acting under section 35 of 1922 Act rectified petitioner's assessment by adding entire amount of estimated loss to total income of petitioner - ITO, however, did not deduct share of loss suffered by petitioner from unregistered firm for determining rate at which tax was payable by him - On revision, Commissioner affirmed order passed by ITO - Whether, in view of section 24 of 1922 Act, it can be concluded that loss incurred by an unregistered firm is not apportioned amongst its partners but remains loss of firm to be carried forward in its accounts of next year for adjustment - Held, yes - Whether, therefore, in instant case, view taken by revenue authorities was a possible view - Held, yes - Whether, consequently, impugned order did not suffer from any infirmity or error apparent on face of record - Held, yes Section 264 of the Income-tax Act, 1961, [corresponding to section 33A of the Indian Income-tax Act, 1922] - Revision of Other Orders - Assessment year 1952-53 - Whether when a revisional Court does not reverse or modify order of Subordinate Court but only rejects application for revision, there is no merger of order of Subordinate Court in order of revisional Court and operative order that remains in order of Subordinate Court and not that of Revisional Court - Held, yes FACTS While assessing income of petitioner assessee, ITO deducted a sum of estimated share of loss of the petitioner in a firm in expectation that the firm would in its assessment be treated as a registered firm. However, when the assessment of the firm was completed, it was not treated as a registered firm and the petitioner's share of loss therein was determined. On receiving the intimation of assessment of firm, the ITO again…

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