COMMISSIONER OF INCOME-TAX Vs. JISHAN LAL KUTHIALA

JUDGEMENT

(1.) AT the instance of the Income-tax Appellate Tribunal, Delhi Bench "c", the following question of law has been referred for our opinion: "whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that Section 24 (1) of the Income-tax Act, 1922, did not apply to the assessee's case and that the assessee-family was entitled to set off its share of loss in the unregistered firm against its other business income under Section 10 of the said Act ?"

(2.) THE assessee is a Hindu undivided family. It derives income from shares held in certain firms, dividend income, etc. The assessee family had 9/16th share in the firm, Messrs. R. S. Jodhamal Kuthiala, New Delhi. There is a dispute as to whether this firm was an unregistered or a registered firm, i. e. , Messrs. R. S. Jodhamal Kuthiala, New Delhi. In the order of the Income-tax Officer it is described as a registered firm. In the order of the Tribunal it is described as an unregistered firm. But, so far as the present case is concerned, it will not make any difference. In the return filed by the Hindu undivided family for the assessment year 1956-57 the assessee declared a loss of Rs. 9,447 regarding the family's share in this partnership business. As the assessment of the firm was still pending at that time, the Income-tax Officer ignored the loss shown by the assessee from this firm and completed assessment of the assessee-family on a total income of Rs. 90,876.

(3.) LATER, the assessee-family filed an application on 9th August, 1962, asking the Income-tax Officer to rectify the assessment order by allowing the loss in the said firm against the assessee's other business income. The Income-tax Officer declined to do so. He took the view that the claim of the assessee was not permissible under Section 24 of the Indian Income-tax Act 1922.