Law:

Section:

Section 72 of the Income-tax Act, 1961 [Corresponding to Section 24(2) of the Indian Income-tax Act, 1922] - Lossas - Carry forward and set off of business loss - Assessment year 1954-55 - Assessee, HUF owned a ginning and pressing factory which suffered a loss during relevant assessment year - In subsequent year assessee carried on business in conjunction with other person to avoid unhealthy competation - Persons joined with assessee under a partnership deed, were owners of similar business which assessee was carrying on - Business under that deed had carried on in assessee factory and factories belonging to other parties remained closed - Assessee had also control of working staff - Assessee claimed set off of loss of relevant assessment year against his share of profit earned in so called joint business - However, ITO disallowed assessee's claim on ground that profit arose in a business different from one in which loss had occurred - Whether in view of facts and circumstances of case it could be concluded that assessee was carrying on same business and partnership deed had not brought about a change in that business nor it had brought into existence a new business or a different business - Held, yes - Whether mere fact that assessee joined another person in business which he was carrying on would not alter nature of business or make it a different business - Held, yes - Whether, therefore, Tribunal was right in concluding that it was same business as earlier carried on by assessee and, assessee was entitled to set off earlier loss against profit of that business - Held, yes FACTS The assessee was a HUF. It owned a ginning and pressing factory. This factory was running at a loss and, at the end of the assessment year 1953-54, there was a registered loss of Rs. 99,932. For the assessment year 1954-55, that factory was not solely run by the assessee HUF, but was run as a joint concern. There was a large profit during this year. The assessee's share came to Rs. 70,015. The assessee claimed that the loss brought forward should be set off against this profit. The ITO declined to do so. In the opinion of the ITO, the profit arose in a business different from one in…

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