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income-tax Officer Vs. M. Chellappan - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Madras
Decided On
Judge
Reported in(1985)11ITD286(Mad.)
Appellantincome-tax Officer
RespondentM. Chellappan
Excerpt:
1. this appeal is directed against the order of the aac, setting off the income added under section 64 of the income-tax act, 1961 ('the act'), against the loss incurred by the assessee. the admitted fact is that the assessee's own income from business and property as well as the other sources was determined at a loss of rs. 50,582. to this amount, the ito added the share of the income of the assessee's minor son from the firms, in which he was admitted to be a partner amounting to rs. 13,029. but, he refused to set off this amount against the loss of the assessee and, thus, brought this amount independently to tax. on appeal the aac followed the decision of the kerala high court in the case of cit v. smt. mary ignatius [1983] 141 itr 954 and held that when the minor's share was being.....
Judgment:
1. This appeal is directed against the order of the AAC, setting off the income added under Section 64 of the Income-tax Act, 1961 ('the Act'), against the loss incurred by the assessee. The admitted fact is that the assessee's own income from business and property as well as the other sources was determined at a loss of Rs. 50,582. To this amount, the ITO added the share of the income of the assessee's minor son from the firms, in which he was admitted to be a partner amounting to Rs. 13,029. But, he refused to set off this amount against the loss of the assessee and, thus, brought this amount independently to tax. On appeal the AAC followed the decision of the Kerala High Court in the case of CIT v. Smt. Mary Ignatius [1983] 141 ITR 954 and held that when the minor's share was being clubbed with that of the assessee, there should be a set off and only the net amount would be taxed. The revenue is in appeal, but is unable to sustain the action of the ITO on any valid principle of taxation. Reliance was placed on the decision of the Madras High Court in the case of CIT v. A.L. Srinivasan [1977] 108 ITR 667, which was a decision rendered under Section 16(3)(a) of the Indian Income-tax Act, 1922. But, we are now concerned with the provisions of the Income-tax Act, 1961, which are not in pari materia. In particular, there is an Explanation which defines income which is to be added under Section 64 to include loss, thus underlining the principle of set off of the amount added under Section 64 with the other amounts of income of the assessee. If the loss to be added under Section 64 could be set off against the other income of the assessee, we fail to see any justification for the argument of the revenue that the income that can be added under Section 64 cannot be set off against the loss of the assessee. Under Section 14 of the Act all the income shall be assessed under one head or the other and clearly the income includible under Section 64 cannot be an exception. That income being assessable under same head or other heads has to be set off against the loss from some other head in view of the clear provisions of Section 71 of the Act.

Moreover, the decision of the Kerala High Court in the case of Smt.

Mary Ignatius (supra) is in favour of the assessee. When two conflicting decisions are available on this point, the one in favour of the assessee has to be adopted in view of the decision of the Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192.

Hence, we see nothing wrong with the order of the AAC allowing the set off of the income. We have, therefore, no hesitation in confirming his order. The appeal is dismissed.


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