TaxTMI 
TaxTMI 
TaxTMI 
1985 (9) TMI 6
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....deed was dated July 30, 1957. It described the three partners-one being L. Hari Shankar and the others being L. Gauri Shankar and the third being L. Prem Shankar, the deceased husband of the assessee. On behalf of the assessee it was stressed before us, as was apparent from the deed, that they all had the same address as described in the said partnership deed. This was pointed out to stress the point that they were members of a joint Hindu family. The recital in the said deed stated that they had been carrying on business since July 9, 1956, and the partnership deed was executed on July 9, 1956, and thereafter one Baijnath, who was also a partner as per the deed of July, 1956, had retired and the parties mentioned in the deed had decided and agreed to carry on business in partnership and the terms were reduced to writing. Clause 6 stated, inter alia, that the partnership was a partnership at will and the Indian Partnership Act, 1932, applied to it. Clause 7 stated that shares of the parties in the profits (or losses, if any) should be as under: First party 0/5/3 in a rupee Second party 0/5/3 in a rupee Third party 0/5/6 in a rupee The other clauses were the usual partnership ....
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....hip of some minor partners. There is another subsequent deed of partnership, which it is not material for our present purpose, to be referred to. For the assessment year 1962-63, the Income-tax Officer while making the assessment on the assessee included under section 64 of the Income-tax Act, 1961, in her total income, the share income as well as the interest earned by the minor adopted son from the partnerships to the benefits of which the minor son was admitted. Prem Shankar, since deceased, while he was a partner had an unabsorbed loss of Rs. 25,914 from speculation suffered as a partner of the firm, M/s. Hari Shankar Gauri Shankar Rice & Dal Mills. It so appears from the order of the Appellate Assistant Commissioner. The Tribunal, in the statement for the present appeal, has, however, stated that this statement by the Appellate Assistant Commissioner was not strictly correct and as per the orders of the Income-tax Officer passed under section 35 of the Indian Income-tax Act, 1922, for the assessment years 1958-59, 1959-60 and 1960-61, the speculation losses were from the firms of M/s. Hari Shanker Gauri Shankar Rice & Dal Mills as well as from Hari Shankar Gauri Shankar. For ....
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....d since the assessee had succeeded her deceased husband, the set-off was allowable against the minor's share of profits too. The Appellate Assistant Commissioner while dealing with this contention of the assessee held that there could be no succession or inheritance in respect of membership of a firm and that on the death of husband or father, the wife or the son might be admitted into the partnership by the remaining partners not because they had an inherited right to join the firm but because the remaining partners were agreeable to their joining the firm and that on such death, the wife or the son might inherit the capital left by the deceased in the firm and the wife or the son might have a right to take away such capital or to allow the same to remain in the firm but they would not have the right of inheritance to join the partnership on the basis of that capital. The Appellate Assistant Commissioner rejected the contentions of the assessee so far as this contention with which this appeal is concerned and held that the assessee was not entitled to set off the speculation losses suffered by her husband against her speculation profits of the assessment year under appeal. From ....
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....of this case, the assessee was entitled to the set-off of speculation losses brought forward from earlier years against the speculation profits of the assessment year under appeal ?" The High Court set out the facts which counsel for the assessee sought to challenge on the ground that most of the facts were not those as found by the Tribunal. We do not find any material or any significant difference between the facts found by the Tribunal and the facts narrated by the High Court, so far as the material question involved in this case is concerned That is the reason why the facts as found in the statement of the case have been set out hereinbefore in such extensive manner, even though these do not appear in that manner in the judgment of the. High Court. "Set off " and "carry forward and set off" are the subject-matters of sections 70 to 80 of Chapter VI of the Act. Right to carry forward is available only to the persons who had suffered losses. Sub-section (1) of section 78 is not material for our present purpose. Sub-section (2) of section. 78, as noticed before, stipulates that where any person carrying on any business or profession has been succeeded in such capacity by another....
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....that the Tribunal's conclusion was one on a question of fact and having regard to the evidence, the court would not be justified in interfering with that conclusion. The assessee was, therefore, entitled to set off against her share of the profits, the losses suffered by the assessee's husband in 1953-54 and 1954-55. The Bombay High Court noted that the sole question decided in that case was whether Bai Maniben had by inheritance succeeded to her husband, Hiralal, in the firm. The High Court noted the significant facts noted by the Tribunal. There are significant similarities and there are significant dissimilarities also between the facts of the present case and the facts of Bai Maniben [1960] 38 ITR 80, upon which reliance was placed respectively by the assessee as well as the Revenue. It was contended on behalf of the assessee that this decision is a stare decision which has stood the test of time and was never doubted until the instant judgment of the Allahabad High Court under appeal and should (therefore) be made applicable in the present case. According to section 42 of the Partnership Act, subject to contract between the partners, a firm is dissolved, inter alia, by the d....
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....) of the Indian Income-tax Act, 1922. In view of the facts involved in that case, it is not material to discuss in detail that decision. In the case of Commissioner of Income-tax v. A. W. Figgies and Company [1953] 24 ITR 405, the provisions of section 25(4) of the Indian Income-tax Act, 1922, came up for consideration by this court and it was held that a mere change in the constitution of a partnership did not necessarily bring into existence a new assessable unit or a distinct assessable entity and in such a case, there was no devolution of the business as a whole. The assessee, partnership firm, carrying on a business consisted of throe partners when it paid tax under the Indian Income-tax Act, 1918. There were several changes in the constitution of the firm since then resulting in changes in the shares of the partners. In 1947, the partnership was converted into limited company and the assessee claimed relief under section 25(4) of the Indian Income-tax Act, 1922. The Income-tax Officer disallowed the claim on the ground that the partners of the firm in 1939 being different from the partners of the firm in 1947, no relief could be given to the assessee. The Appellate Tribunal ....
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....at the death of a partner would not dissolve the partnership and option was given to the partners to continue the partnership on the death of one of the partners. It was urged that such is not the position in the instant case. But, in our opinion, that does not make any significant difference. In the instant case, the conduct of the parties in the absence of any specific clause preventing such a construction would not prevent the court from drawing such an inference if the facts so warrant. In the case of CIT v. Madhukant M. Mehta [1981] 132 ITR 159 (Guj), the question involved was different. The decision under appeal was referred to by the Gujarat High Court at page 182 of the report. It was observed that the said decision was not reconcilable with the decision of the Bombay High Court in CIT v. Bai Maniben [1960] 38 ITR 80 and it was further commented that Bai Maniben's case [1960] 38 ITR 80 was sought to be distinguished in the decision of the Allahabad High Court under appeal, but P. D. Desai J., who delivered the judgment of the court, expressed the opinion that the court was not satisfied that the distinction made any difference in that case. The main point which was stress....