COMMISSIONER OF INCOME TAX Vs. MAHALAKSHMI FILM DISTRIBUTORS

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue. The question raised for an answer is follows ;

(2.) SECTION 75 of the Act already quoted clearly indicates the manner in which advantage can be taken by a firm in respect of its loss. SECTION 75 makes the position clear that it is a restrictive benefit to a firm. The language of SECTION 75(1) is clear that a loss which cannot be set off shall be apportioned between the partners. They can take the benefit of SECTIONs 70, 71, 72, 73, 74 and 74A and carry forward the loss. They themselves exclude a firm from carrying forward the loss to the subsequent years. It is true that the Madras High Court, in the decision relied upon by the Tribunal as well as in another decision reported in CIT v. Madras Wire Products [1980] 123 ITR 722, held that the principles of SECTIONs 70 to 74A are also applicable to a firm. In view of the clear language in SECTION 75 of the Act, with great respect to the view of the Madras High Court, we are not able to accept such a view.