Partner's share of firm loss can be set off against other business profits within the same income head.

A partner's share of loss in an unregistered firm is treated as business loss under the Income-tax Act, 1922 and may be adjusted against profits from his other businesses in the same year. The scheme of section 10 allows profits and losses of different businesses carried on by the same assessee to be computed within the same head, while section 16(1)(b) brings a partner's share of firm profit or loss into total income. Section 24 governs inter-head set-off and carry-forward, so its provisos do not bar intra-head adjustment under business income. The claim for set-off was therefore allowed in favour of the assessee.

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Issues: Whether a partner of an unregistered firm can adjust his share of the firm's loss against profits from his other businesses while computing income under the head "profits and gains of business, profession or vocation".

Analysis: The relevant scheme of the Income-tax Act, 1922 treats all businesses as falling within one head under section 10, so that profits from one business may be adjusted against losses from another business carried on by the same assessee. A partner's share in the profit or loss of a firm is part of the business income attributable to him, because the business of the firm is also the business carried on by the partners. Section 16(1)(b) recognises that a partner's share in the net profit or loss of a firm enters the computation of total income, while the proviso refers only to set-off or carry-forward under section 24. Section 24(1) deals with set-off between different heads and the second proviso cannot be extended to prevent adjustment within the same head under section 10. Section 24(2)(c) similarly governs carry-forward and does not exclude adjustment of a partner's share of loss in the same year against profits of other businesses.

Conclusion: The assessee was entitled to adjust his share of the unregistered firm's loss against his profits from other businesses.

Final Conclusion: The reference was answered in favour of the assessee, and the claimed business loss set-off was permitted.

Ratio Decidendi: A partner's share of loss in an unregistered firm is part of his business loss under section 10 and may be adjusted against his profits from other businesses in the same year, since section 24 governs only inter-head set-off and carry-forward, not intra-head computation under business income.

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