SHANKARANARAYANA CONSTRUCTION CO Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) THE petitioners have claimed that by virtue of the amendment by the Karnataka Taxation Laws (Amendment) Act, 1994, Kar-nataka Act No. 18 of 1994, the Karnataka Agricultural Income-tax Act, 1957, has been amended and registered partnership firms have been made as assessable units, but the partners who had unabsorbed loss prior to the commencement of the amendment Act have not been given the set off. It is submitted that either the unabsorbed loss of its partner prior to April 1, 1994, be directed to be set off or the provisions of Act No. 18 of 1994, making the registered partnership firm as assessable unit be declared unconstitutional. It is stated that between October 1, 1957, and March 31, 1987, registered firms were not assessed to tax but share of profits of each partner was assessed in his hands.

(2.) BETWEEN April 1, 1987, to March 31, 1994, Section 19A was in force providing for assessment of registered firms and for levy of tax. The share of profits of the partners was assessable in his hands also. Section 19A(2) contemplated that if such share of any partner is a loss, it shall be set off against his other income or carried forward and set off in accordance with the provisions of Section 15.

(3.) RELIANCE is placed on the decision in the case of CIT v. J. H. Gotla , wherein it is observed where Section 16(3) of the Act operates, the profit or loss from a business of the wife or minor child included in the total income of the assessee should be treated as the profit or loss from a "business carried on by him" for the purpose of carrying forward and set off under Section 24(2) of the Act.