2002 (7) TMI 232

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....income under the head 'capital gains' of Rs. 86,200 for the assessment year 1994-95. 3. When the appeal was posted for hearing on 2-5-2002, none was present on behalf of the appellant-assessee. So, the notice was directed to be sent by R.P.A.D. and the case was posted for hearing on 8-7-2002. Even on this date, viz. 8-7-2002, none appeared on behalf of the assessee, and there was not even an adjournment petition. In the circumstances, I am constrained to proceed to dispose of the appeal ex parte qua the assessee after hearing the learned Departmental Representative. 4. Assessee filed a return, in which he apparently claimed set off of the above losses of Rs. 4,19,400 from the firm, M/s. Hotel Maniar, of assessment years 1990-91 and 1992-....

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....Assessing Officer's order at issue." 5. In the grounds taken, the assessee has mentioned that as the share income is taken into account in the assessment of the partner, for ascertaining the rate of tax, the share of loss allocated to the partner has also to be considered in the hands of the partner. 6. Before me, the learned Departmental Representative relied on the order of the CIT(A). 7. I am of the view that the assessee deserves to succeed in this appeal. The reasoning given by the Assessing Officer for making the disallowance under section 143(1)(a) is not tenable. This is because the provisions of section 80 read with section 139(3) apply only in respect of the returns for the assessment year in which the loss is claimed to ....

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....ndition that the partner continues in the said firm and to be carried forward for set off under sections 70, 71, 72, 73, 74 and 74A." It may be observed that section 75 mandates that share of loss from a firm for the assessment year commencing on or before I St day of April, 1992, allocated to a firm but not set off against his other income has to be allowed to be set off against the income of the firm. So, such loss, as allocated to a partner, to the extent not set off against his other income, has to be set off against the income of the firm in a subsequent year. The provision however, is silent on the question whether such set off can be allowed in the hands of the partner in subsequent years. In other words, while the section mandate....