GOCULDAS R M Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this reference two questions referred to us at the instance of the assessee by the Tribunal, Bombay, Bench"D", areas under:

(2.) A few facts necessary to appreciate the point in controversy may now be stated. The assessee, an individual, was a partner in the firm of M/s Kosangas & Co. in which his wife, Rukmini, was also a partner. We are concerned in this matter for asst. yrs. 1966 67 and 1967 68. For these two years the said firm had suffered a net loss in its business. When the ITO finalised the assessment for the two years, he included in the assessee's hands, under the provisions of S. 64 of the IT Act, the share of loss falling to the wife which came to Rs. 28,185 for the asst. year 1966 67 and Rs. 84,406 for the asst. year 1967 68. The total loss in the assessee's hands including these two amounts was computed at Rs. 2,06,856 and Rs. 6,48,590 respectively for the two assessment years. The Addl. CIT on going through the records formed the opinion that the wife's share of loss in the firm for the two years should not have been included in the assessment of the husband. This opinion was formed obviously in view of the decision of the Gujarat High Court in Dayalbhai Madhavji Vadera vs. CIT (1966) 60 ITR 551 (Guj). Accordingly holding that the orders of the ITO were erroneous and prejudicial to the interest of the Revenue, the Addl. CIT acting under the provisions of S. 263(1) revised these orders directing the ITO to exclude the loss sufferred by the wife for the two years under consideration.

(3.) THE next point considered by the Tribunal was whether the Addl. CIT was correct in directing the ITO to delete the wife's (share of) losses. The Tribunal observed in its order dated 18th January, 1983, that this, was the only High Court ruling directly on the point and this ruling of the Gujarat High Court was against the assessee. The observation in the Commentary to the IT Act by Kanga and Palkhivala at page 599 of the 7th Edition Vol. 1, was brought to the attention of the Tribunal but the Tribunal preferred to accept, and rightly so, the decision of the High Court in preference to the opinion of the esteemed commentators.