Set-off of loss from an unregistered joint venture was disallowed against the assessee's own income under settled tax law.

A registered assessee-firm could not set off its share of loss from an unregistered joint venture against its own income, because the governing rule from Commissioner of Income Tax v. Jadavji Narsidas & Co. limited such loss to set-off only against the income of that unregistered firm. The fact that the department had not assessed the unregistered entity, or had not taken action under the relevant provision, did not change that legal position. The prior view allowing the set-off was therefore no longer good law, and the claim was disallowed.

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Issues: Whether a registered assessee-firm could set off its share of loss in an unregistered joint venture against its other income when the unregistered firm had not been assessed under the relevant provision.

Analysis: The loss claimed arose from a joint venture between the assessee-firm and another concern. The earlier view that such loss could be set off was no longer good law in view of the Supreme Court decision in Commissioner of Income Tax v. Jadavji Narsidas & Co., which held that the loss of an unregistered firm could be set off only against the income of that unregistered firm and that it made no difference that the department had not assessed the firm or taken action under the relevant provision. The circumstance that the unregistered entity had been assessed did not alter the legal position for the assessee's claim to set off the loss against its own income.

Conclusion: The claim for set-off was not allowable and the answer was against the assessee and in favour of the Revenue.

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