Law:

Section:

Section 71, read with section 182, of the Income-tax Act, 1961 [Corresponding to section 24 read with section 23(5), of Indian Income-tax Act, 1922] - Losses - Set off of from one source against income from another - Assessment year 1958-59 - Assessee firm entered into a partnership with a company for completion of two contracts one at 'A' and another at 'C' - Later on this, partnership was dissolved - This partnership was assessed in earlier years in status of an unregistered firm - For relevant year no assessment was made - However, assessee-firm assessed as registered firm returned profit from contract at 'C' and claim that loss to sustained by it under dissolution deed of contract at 'A' should be adjusted - ITO disallowed said claim - However, Tribunal following the decision of this court in Jadavji Narsidas & Co. v. Commissioner of Income-tax Tribunal accepted this contention raised by Hirani Firm in part - Whether in view of Supreme Court's decision in CIT v. Jadavji Narsidas & Co. [1963] 48 ITR 41 it was to be held that losses of unregistered firm could only be set off against income of unregistered firm and assessee firm could not set off loss in dissolved unregistered firm against its income - Held, yes - Whether it made no difference that department had not assessed unregistered firm or taken action under section 23(5)(b) - Held, yes FACTS Assessee firm entered into a partnership with a company for completion of two contracts one at 'A' and another a 'C'. Later on this, partnership was dissolved. This partnership was assessed in earlier years in status of an unregistered firm. For relevant year no assessment was made. However, assessee-firm assessed as registered firm returned profit from contract at 'C' and claim that loss to sustained by it under dissolution deed of contract at 'A' should be adjusted. ITO disallowed said claim. However, the Tribunal following the decision of this court in Jadavji Narsidas & Co. v. CIT [1959] 36 ITR 266 (Bom.) the Tribunal accepted this contention raised by Hirani Firm in part. On reference : HELD In similar circumstances, in the case of CIT v. Jadavji Narsidas & Co. [1956] 29 ITR 535, the Supreme…

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