NARAIN SINGH S Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE dispute relates to the asst. yr. 1951-52, the relevant previous year being the year ended on 31st March, 1951. In the accounting years relevant to the asst. yrs. 1949-50 and 1950-51, i.e., the two years preceding the year of assessment, the assessee took certain contracts regarding the sale of liquor in his individual name and sustained losses of Rs. 48,619 and Rs. 4,892, respectively. During the asst. yr. 1951-52, with which we are concerned, the assessee with ten other persons, took another liquor contract and the business was carried on by the partnership under the name and style of Dulat Ram, Hans Raj and Co. This partnership was registered for the asst. yr. 1951-52, and, therefore, the question has to be answered in the light of this fact. THE assessee's share in the said registered firm was 11 1/4 pies in a rupee and during that year, his share of profits came to Rs. 20,414. THE assessee claimed that he was entitled to carry forward and set off the losses assessed in the asst. yrs. 1949-50 and 1950-51 to the extent of Rs. 20,414 against his share of the profits from the registered firm assessable in the asst. yr. 1951-52. THE ITO rejected the claim of the assessee, but the AAC in appeal allowed the same. THE Tribunal, on an appeal by the Revenue, decided that there was no identity between the business which was carried on by the assessee alone in the asst. yrs. 1949-50 and 1950-51 and the business which was carried on by the partnership in the name of Dulat Ram Hans Raj and Co. and, consequently, the assessee was not entitled to carry forward the losses. At the instance of the assessee, the Tribunal stated the case to this Court and referred the following question of law :

(2.) THE parties were in agreement as to the test applicable and that agreement is reflected in the observation of the Tribunal when it says that, before such a claim can be allowed, two identities have to be satisfied, viz., (i) the identity between the assessee who sustained the loss and the assessee who made the profit ; and (ii) the identity in regard to the business or, in other words, the assessee should be carrying on " the same business, profession or vocation " in all the years. It is significant that the Revenue did not dispute the existence of the first identity but founded its argument on the absence of the second identity. THE Tribunal observed :