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Commissioner of Income Tax Vs. Prabhudas and Co. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberI.T. Ref. No. 32 of 1971
Judge
Reported in(1980)17CTR(Bom)8
ActsIncome Tax Act, 1961 - Sections 73, 73(2), 75 and 75(2)
AppellantCommissioner of Income Tax
RespondentPrabhudas and Co.
Excerpt:
- - 2,17,329/- from speculative business of the year under reference ?' 2. since on hearing the counsel we are satisfied that the controversy raised in the question is concluded by the decision of the supreme court, we do not think it necessary to set out the facts of this case in detail......of the revenue is as follows :'whether on the facts and in the circumstances of the case, the assessee firm was entitled to carry forward and set off losses from speculation business incurred in the asst. yrs. 1963-64 to 1965-66 against the profit of rs. 2,17,329/- from speculative business of the year under reference ?'2. since on hearing the counsel we are satisfied that the controversy raised in the question is concluded by the decision of the supreme court, we do not think it necessary to set out the facts of this case in detail. the relevant facts may, however, be briefly set out. the assessee firm incurred losses in speculation business amounting to rs. 2,72,992/-, 3,74,510/- and rs. 24,282/- in the asst. yrs. 1963-64, 1964-64 and 1965-66 respectively and undisputedly the loss.....
Judgment:

Chandurkar, J.

1. The question which has been referred to this Court u/s 256(1) of the IT Act, 1961 at the instance of the Revenue is as follows :

'Whether on the facts and in the circumstances of the case, the assessee firm was entitled to carry forward and set off losses from speculation business incurred in the asst. yrs. 1963-64 to 1965-66 against the profit of Rs. 2,17,329/- from speculative business of the year under reference ?'

2. Since on hearing the Counsel we are satisfied that the controversy raised in the question is concluded by the decision of the Supreme Court, we do not think it necessary to set out the facts of this case in detail. The relevant facts may, however, be briefly set out. The assessee firm incurred losses in speculation business amounting to Rs. 2,72,992/-, 3,74,510/- and Rs. 24,282/- in the asst. yrs. 1963-64, 1964-64 and 1965-66 respectively and undisputedly the loss arose in speculation business in shares. This loss was apportioned between the three partners of the firm and the losses so apportioned were carried forward in the individual assessment of the respective partners for the respective years. The assessee firm, however, earned a profit of Rs. 2,17,329/- from speculation business in shares in the asst. yr. 1966-67. Before the ITO the assessee had contended that the total losses incurred by the assessee firm amounting to Rs. 6,71,784/- in the immediately three preceding years was liable to be carried forward and set oft against speculation profit in the asst. yr. in question, i.e. 1966-67.

3. The ITO held that as the speculation losses have not been allocated amongst the partners and have been carried forward in the individual assessment of the partners, the same could not again be set off against the speculation profit of the firm. The Order of the ITO was upheld by the AAC. The Tribunal, however, took a contrary view and directed the ITO to carry forward the losses from speculation business incurred in the asst. yrs. 1963-64 to 1965-66 to the year under appeal and to set off the profit of Rs. 2,17,329/- from speculation business of the year under appeal against the same. That is how the question reproduced above has been referred at the instance of the Revenue.

4. The controversy is concluded by a direct decision of the Supreme Court reported in M. O. Devassia & Co. v. CIT, Kerala, in which the question as the whether a firm was entitled to have its losses in speculation business carried forward for set off against future profits in speculation business in the light of provisions of s. 75(2) of the IT Act, 1961 has been considered. The Supreme Court has taken the view that for the purpose of set off and carry forward of the loss, apportionment between the partners of the firm has be made and they alone are entitled to have the amount of the loss carried forward for set off u/s 73. The Supreme Court has pointed out that the matter has been put beyond any pale of doubt and challenge in sub-s. (2) of s. 75 when it says the nothing contained in sub-s. (2) of s. 73 shall entitle any assessee, being a registered firm, to have the loss carried forward and set off under the provisions of s. 73(2). The Supreme Court has also in that case pointed out that its earlier decision in Kantilal Nathuchand's case, cannot be applied in respect of the assessments made under the IT Act, 1961.

5. Shri Dustur, Counsel for the assessee, wanted to argue that the reasoning which has appealed to the Tribunal does not seem to have been either urged before or considered by the Supreme Court. Such an argument is not open in this Court, as we are bound by the decision of the Supreme Court.

6. Consequently, the question referred is answered in the negative and in favour of the Revenue Assessee to pay costs to the Revenue.


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