1965 (12) TMI 151

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....1955, to the 9th August, 1956, the assessee claimed that it had suffered a loss of ₹ 8,814 towards its share in the unregistered firm and that it should be allowed a set-off against its profits from other businesses in this year. The Income Tax Officer did not allow the set-off, and his view was upheld in appeal by the Appellate Assistant Commissioner. One further appeal by the assessee, the Appellate tribunal felt coerced by the view taken by the Bombay High Court in Jadavji Narsidas & Co. v. Commissioner of Income Tax and decided that the loss should be set off. At the instance of the Commissioner of Income Tax, this reference has been made to this court under section 66(1) of the Act for determination of the following questions of ....

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....t the loss incurred by an unregistered firm, which has not been assessed under the provisions of clause (b) of sub-section (5) of section 23, can be set off only against the income, and the profits and gains, of the firm and not against the income and profits and gains of any of the partners of the firm. The argument on behalf of the assessee is that the unregistered firm was not assessed to tax, and it is not the unregistered firm which is claiming a set-off; but the assessee in this case being a person who was a partner of the unregistered firm, which has sustained a loss, is entitled to the set-off under sub-section (1) of section 24 and the proviso does not hit his case. The argument does find support from the Bombay decision, referred ....