M O DEVASIA AND CO KERALA M 0 DEVASIA AND CO KERALA Vs. COMMISSIONER OF INCOME TAX KERALA:C I T KERALA

JUDGEMENT

(1.) These six appeals have been heard together as a common question of law in relation to the assessment of the same assessee arises in them. Civil Appeals 2716-2718 of 1972 relate to the assessment years 1964-65, 1965-66 and 1966-67. The assessee appellant is a registered firm carrying on business at several places in the State of Kerla. Apart form its regular trade in various commodities, the assessee was also carrying on a business in speculation. Apropos the speculation business of the assessee the Income-tax Officer determined a loss of Rs. 40,510/-; a loss of Rs. 598 and a profit of Rupees 1,36,264/- for the assessment years 1964-1965, 1965-66 and 1966-67 respectively.

(2.) In apportioning the assessee's income amongst its partners under Section 67 of the Income Tax Act, 1961, hereinafter referred to as the Act, the also apportioned the losses in speculation business in the two assessment years 1964-65 and 1965-66. The profit in speculation business as computed for the assessment year 1966-67 was also apportioned by the Income-tax Officer amongst the partners. The assessee contended before the Income-tax Officer that the losses in the speculation business could not be apportioned between the partners but should be carried forward and set off against the profit in the said business made in the assessment year 1966-67. The Income tax Officer rejected this contention. But the Appellate Assistant Commissioner in appeal following the decision of this Court in Commr. of Income-tax, Gujarat v. Kantilal Nathuchand Sami 63 ITR 318:(1967) 1 SCR 813 accepted the assessee's stand. The department took the matter in second appeal before the Income-tax Appellate Tribunal. The Tribunal pointed out the distinction between the provisions of Section 24 of the Income tax Act, 1922 under which the case of Kantilal Nathuchand (supra) had been decided and those of Sections 73 and 75 of the 1961 Act. It, therefore, allowed the department's appeal. On being asked by the assessee to state a case and make a reference to the High Court, the Tribunal referred the following question of law for opinion:

(3.) The High Court of Kerla on a consideration of the relevant provisions of the Act contained in Chapter VI has answered the reference in favour of the Revenue and against the assessee. The decision of the High Court is reported in M. O. Devasia and Co. v. Commissioner of Income-tax, Kerala 90 ITR 525. (1973 Tax LR 138) (Ker). Civil Appeals 2716 to 2718 of 1972 have been filed in this Court by special leave.