Carry forward and set-off of a partner's firm loss upheld where the same business continued after dissolution.

A partner's share of a loss arising in a registered firm could be carried forward and set off under the 1922 Act where it was not absorbed in the year of assessment. The decisive question was whether the business later carried on by the assessee as sole proprietor after dissolution was the same business as that conducted through the firm. On the facts, the business identity continued despite the change from partnership to sole proprietorship, so the loss remained available for set-off against later profits. The assessee was therefore entitled to carry forward and set off the share of the firm's loss.

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Issues: Whether a partner who, after dissolution of a registered firm, continued the same business as sole proprietor was entitled to carry forward and set off his share of the firm's loss against the profits of that business for a later assessment year.

Analysis: The loss attributable to the assessee had arisen in a registered firm and, under the 1922 Act, a registered firm was a taxable entity but the partners were also assessed on their shares, creating the possibility of double taxation. The legal position recognised that a partner's share of a registered firm's loss, if not absorbed in the same year, could be carried forward and set off in accordance with section 24(2). The decisive consideration was whether the business carried on by the assessee as sole proprietor after dissolution was the same business as that formerly carried on through the registered firm. On the facts, the business identity continued notwithstanding the change in the form of ownership.

Conclusion: The assessee was entitled to carry forward and set off the loss, and the question was answered in the affirmative in favour of the assessee.

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