COMMISSIONER OF INCOME TAX Vs. MARARARUNACHALAM CHETTIAR

JUDGEMENT

(1.) The question referred is, " Where a person carries on two different trades one individually and the other as a member of an unregistered firm, is he entitled to set off (that is, for income-tax purposes), the loss incurred by him in respect of the partnership trade against the profits made by him in his individual trade? "

(2.) The facts are that the assessee has an income from trade profits in two distinct and separate businesses of his own and from other property, has made losses in other businesses of his own, and also has incurred losses in two distinct businesses in which he is a partner and which businesses are not registered.

(3.) The question for decision is a difficult one, the difficulty arising from the wording of the Income Tax Act. If our decision is not in accordance with the real intention of the legislature, it is for the legislature to make that intention clear hereafter. The relevant sections for consideration are 6, 10 and 24, and the difficulty is to ascertain the proper interpretation of the two latter. Section 6 is merely a division into heads of the different sources of income, one being business concluding with a general head of Other Sources. Section 10 defines and elaborates the profits and gains covered by the heading Business. The tax is payable by an assessee under the head Business in respect of the profits or gains of any business carried on by him. Assessee is defined in Section 2 as a person by whom income-tax is payable . No mention is made in Section 10 of partnerships registered or unregistered, and, although it is the practice to assess firms as such, 1 can find nothing to justify the argument that each partner in a firm is not an assessee, for he is a person by whom the income-tax is payable; nor can 1 find anything to justify the argument that this assessee, being a partner, is not a person carrying on the business in question. I am, therefore, prepared to hold that the present assessee is an assessee in respect of the profits and gains of the businesses which he carries on in partnership.