Set-off of unabsorbed business loss allowed where the same family continued the same business; no referable question of law arose.

Where a Hindu undivided family had been assessed on income from a firm and the loss related only to the period when the karta was a partner, the High Court noted that the family later carried on the same business in a different name and allowed set-off of the unabsorbed loss under section 72(1) of the Income-tax Act. On the reference question, the Court held that the Tribunal's view on continuation of the business was a pure finding of fact and did not give rise to a referable question of law under section 256(2). The Revenue's request for reference was therefore declined and the assessee's set-off claim remained undisturbed.

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Issues: (i) whether the assessee was entitled to set off the unabsorbed loss attributable to its share in the firm despite the karta having ceased to be a partner; and (ii) whether any referable question of law arose for consideration under section 256(2) of the Income-tax Act, 1961.

Issue (i): Whether the assessee was entitled to set off the unabsorbed loss attributable to its share in the firm despite the karta having ceased to be a partner.

Analysis: The loss related only to the period during which the karta had been a partner in the firm, and the share of income from that firm had been assessed in the hands of the Hindu undivided family. The same family thereafter carried on the same business in a different name. In that situation, the statutory relief for set-off of loss under section 72(1) was available.

Conclusion: The claim to set off the loss was upheld in favour of the assessee.

Issue (ii): Whether any referable question of law arose for consideration under section 256(2) of the Income-tax Act, 1961.

Analysis: The Tribunal's view that the factual position regarding continuation of the business was a finding of fact did not give rise to a question of law warranting a reference.

Conclusion: No referable question of law arose.

Final Conclusion: The request for a reference was declined and the Revenue's petition failed, leaving the assessee's entitlement to set-off undisturbed.

Ratio Decidendi: Where the loss pertains to the period of partnership and the same assessee continues the same business, set-off under section 72(1) may be allowed, and a pure finding of fact does not, by itself, raise a referable question of law.

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