1. This and the connected references under Section 66(1) of the Indian Income-tax Act, 1922, raise a common question relating to the same assessee for assessment years 1954-55, 1955-56 and 1956-57, and hence they are being disposed of by this common judgment.
2. There were two sugar companies at Rampur known as the Raza Sugar Company Ltd. and Buland Sugar Company Ltd. which were merged with effect from November 1, 1955, by an order of this court in 1957, Consequent upon this merger the name of Buland Sugar Company was changed into Raza Buland Sugar Company. The assessee in the present references is Raza Buland Sugar Company Ltd. but references in fact relate to the assessments of Buland Sugar Company.
3. The two sugar companies had formed a partnership firm known as the Agricultural Company. The Agricultural Company suffered a loss. It was assessed as unregistered firm for the assessment years in question. The Buland Sugar Company Ltd. (hereinafter referred to as 'the assessee') claimed to set off its share of loss in the Agricultural Company against its own profits of the relevant year. This claim was disallowed by the Tribunal on the basis of a decision of this court relating to the other partner, namely, The Raza Sugar Company, reported as Raza Sugar Co. v. Commissioner of Income-tax : 76ITR541(All) . There the High Court held that as the Agricultural Company had been assessed as unregistered firm and its assessment had become final, no partner could claim to set off its share of loss against its individual income by reason of the provisions contained in the second proviso to Section 24(1) of the Indian Income-tax Act, 1922 (hereinafter referred to as 'the Act'). At the instance of the assessee, the Tribunal has, however, referred the following question of law for the opinion 6f this court:
'Whether, on the facts and in the circumstances of the case, the assessee, a partner in the Agricultural Company assessed as an unregistered firm, is entitled to set off its share of loss therefrom against its other income ?.'
4. When the matter came up before a Division Bench of this court, of which one of us was a member (Hon'ble Gulati J.), it was felt that the decision of the High Court in the case of Raza Sugar Company v. Commissioner of Income-tax required reconsideration and that is why the matter is before us.
5. When these references came up before us, the department's counsel drew our attention to a judgment of the Supreme Court passed on the special leave petition against the judgment of this court in the case of Raza Sugar Company. It appears that the High Court had granted a certificate to the assessee to appeal to the Supreme Court but it did not give any reason in support of the certificate and hence the Supreme Court did not admit the appeals on the basis of the certificate. The assessee then moved special leave petitions which were rejected with the following observation :
'These appeals are brought on the strength of a certificate issued by the High Court of Allahabad. The High Court has not given any reasons in support of the certificate issued. Hence, the appeals in question are not maintainable. Realising that difficulty the assessee has moved the special leave petitions above mentioned. We have heard the assessee's counsel at length on the special leave petitions. We do not think that these are fit cases to be heard by this court. In the result the appeals as well as the special leave petitions are dismissed. No costs.'
6. We are of the opinion that after the judgment of the Supreme Court no scope is left for us to enter into the question. When the Supreme Court dismissed the special leave petition after hearing the counsel for the assessee at length on the ground that the cases were not fit to be heard by that court, it is proper to presume that the special leave petitions were dismissed because they lacked merit. We have accordingly no choice except to answer the question in the negative.
7. However, we may observe that the question arising out of these cases is of frequent occurrence upon which there is clear cleavage of opinion between the various High Courts. The Bombay High Court in Commissioner of Income-tax v. Jagannath Narsingdas : 55ITR128(Bom) the Gujarat High Court inCommissioner of Income-tax v. Jethalal Zaverchand Patalia : 61ITR357(Guj) the Andhra Pradesh High Court in Commissioner of Income-tax v. Vakati Sanjeeva Setty : 46ITR755(AP) and the Delhi High Court in Commissioner of Income-tax v. Ram Swamp Gupta : 92ITR495(Delhi) have held that a partner of an unregistered firm which suffers a loss is entitled to set off his share of loss against his income from other business. The Calcutta High Court in Ranjit Kr. Banerjee v. Commissioner of Income-tax,  69 ITR 32the Patna High Court in Commissioner of Income-tax, v. Gangadhar Natkmal : 60ITR790(Patna) .the Mysore High Court in Chickotappa v. Income-tax Officer : 81ITR431(KAR) and the Allahabad High Court in the case of Raza Sugar Company7 have taken a contrary view. We think that the view expressed by the Bombay High Court, the Gujarat High Court, the Andhra Pradesh High Court and the Delhi High Court appears to be a better view. The reason is very simple. Section 24(1) of the Act provides for the set off of loss in computing the aggregate income and reads:
'Where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in Section 6, he shall be entitled to have the amount of the loss set off against his income, profits or gains under any other head in that year.'
8. This provision clearly comes into play when an assessee wants to set off loss against any other head of income enumerated in Section 6. It has no application where loss is sought to be set off against income arising under the same head. Section 10 is the head for the computation of business income. When an assessee sustains a loss in one business he can set it off against his income against another business under the same head, namely, Section 10(1) of the Act. Section 24 has no application to such a case. In the instant case also the unregistered firm suffered a loss of profits under Section 10 and the assessee who is a partner of the unregistered firm wanted to set off his share of loss against his other income from business. In our opinion, he could do so under Section 10(1) of the Act. The distinction pointed out by this court in the case of Rasa Sugar Co. that the assessment of the unregistered firm had become final is not material. The share of loss of a partner of an unregistered firm is his loss arising from business and he can set it off against his income from another business without the aid of Section 24, whether the unregistered firm had been assessed or not.
9. Moreover, a reading of the second proviso to Section 24(1) shows clearly that it applies only where the assessee claiming set-off is an unregistered firm and not when the set-off is claimed by its partner. In the instant case the set-off of loss is being claimed by a partner who is an individual and not by the firm itself.
10. We have appended these observations with the hope that the Supreme Court will, when an occasion arises, decide the question and set at rest the : conflict which prevails at the moment. We, however, make no order as to costs.
A. Banerji, J.
10. I agree with the reasons and the conclusion indicated in the judgment of brother, Gulati J. that the question referred to the Full Bench must be answered in the negative. However, in my opinion, it is not necessary to express any opinion as to which of the two views, taken by the different High Courts is to be preferred. In fact there was no argument at the Bar on the merits of the two differing view's.
Satish chandra, J.
11. I agree with brother, Banerji J.
By The Court
12. The question referred to this court is answered in the negative, in favour of the department and against the assessee. The Commissioner would be entitled to costs, which are assessed at Rs. 200.