TaxTMI 
TaxTMI 
1972 (7) TMI 25
X X X X Extracts X X X X
X X X X Extracts X X X X
....-67. The Income-tax Officer by an assessment order dated November 14, 1969, assessed the net income of the petitioner at Rs. 1,02,881. The petitioner was aggrieved with the assessment order inasmuch as no adjustment was given in respect of development rebate and depreciation allowance and losses of the earlier years were not set off against the income assessed. The petitioner accordingly moved an application under section 154 for the rectification of the assessment order. The petitioner had suffered losses including the depreciation allowances for the immediately three preceding years as under : Assessment year Determined profit or losses Depreciation Rs. Rs. 1961-62 Loss 16,057 17,556 1962-63 Loss 1,....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... now challenged the order of the Commissioner as also of the Income-tax Officer. 4. The contention put forward on behalf of the petitioner is that the losses of the preceding years should have been carried forward and set off against the total income of the firm for purposes of determination of the "firm tax". It is not disputed that the losses including depreciation of the preceding years have already been allocated between the partners. But it is contended that, in spite of that allocation, the losses have to be carried forward and set off in the computation of the total income of the firm for purposes of levy of "firm tax". If this contention of the petitioner is accepted, it would not be liable to any "firm tax". 5. Now, under the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to set if off against their Individual income and carry forward the unabsorbed depreciation in subsequent years. Sections 72 to 75 deal with carry forward and set off of business loss. The same principle is followed in respect of business loss also, so that the business loss of one year which cannot be set off against income from other heads is carried forward and set off against the business profits of the succeeding years. This principle, however, does not apply to a registered firm. Provision with regard to it is contained in section 75 which reads as under : "75. Losses of registered firms.-(1) Where the assessee is a registered firm, any loss which cannot be set off against any other income of the firm shall be apportioned bet....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the partners and on which the firm does not pay any tax, but such restriction should not be made applicable to the determination of the income of the firm for purposes of levy of "firm tax". 8. Reliance for this proposition is placed upon a decision of the Income-tax Appellate Tribunal, Bombay Bench "A", in P. Co., Bombay v. 8th Income-tax Officer, A-Ward, Section I, Bombay. In that case a distinction was sought to be made between a substantive tax which is to be paid by the partners of a registered firm and a subsidiary tax which is to be paid by the registered firm itself. It has been held in that case that the prohibition contained in sub-section (2) of section 75 applies only in the case of determination of substantive tax and does ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dered to be a part of the income-tax, then the carry forward of the depreciation and losses is not permissible in the case of a registered firm in view of the prohibition contained in sub-section (2) of section 32 and sub-section (2) of section 75. If, on the other hand, the "firm tax" is considered to be a tax of a different nature, then also the carry forward of loss and depreciation is not permissible, because there is no provision authorising such a carry forward and set-off. 10. In the judgment of the Income-tax Appellate Tribunal, Bombay, there is a reference to a decision of the Supreme Court in Commissioner of Income-tax v. Kantilal Nathuchand Sami. That was a case under section 24 of the Indian Income-tax Act, 1922, which dealt ....