Decided on December 21,1954



- (1.)THIS case is referred by the Tribunal Bombay Bench, under S. 66(1) of the IT Act.
(2.)THE relevant facts are as follows : The assessee in the case was the late Sir Maneckji Dadabhoy. He was a partner in an unregistered firm styled "Bissesar House Nagpur." His total income for the assessment years 1950 -51 and 1951 -52 was determined by the Tribunal as under :
(3.)ACCORDING to the ITO, the amount on which the assessee was liable to pay the tax was Rs. 1,25,620. The figure of Rs. 1,25,620 was arrived at after deducting from the net income of Rs. 6,38,579 the sum of Rs. 5,16,434 which was the income of the assessee from the Bissesar House (which had already been taxed in the hands of the firm) and adding thereto the sum of Rs. 3,475. The Tribunal held that the income on which the tax was leviable was Rs. 1,22,145 which was arrived at by deducting Rs. 5,16,434 from Rs. 6,38,579. This was for the asst. year 1950 -51. In the year 1951 -52 the gross income of the assessee was, as would appear from the third column, Rs.
. Assessment years . . 1950 -51 1951 -52 . Rs. Rs. (1) (2) (3) Salary 13,470 15,834 Property 781 3,870 Share income from Bissesar House, Nagpur (unregistered firm) 5,16,434 2,86,788 Director' fee 2,025 1,775 Interest 9,635 6,600 Dividends (gross) 99,709 84,051 Foreign income (net) brought into India Rs. 2,732 (being less than Rs. 4,500 not taken into account in 1950 -51). . 17,297 Interest on securities . 16,011 . 6,42,054 4,32,226 Less : Loss in own personal business (including depreciation). 3,475 2,797 . 6,38,579 4,29,429 4,32,226 and his share of income from the Bissesar House Rs. 2,86,788. The loss which he had incurred in his personal business was Rs. 2,797. The ITO taxed him on an income of Rs. 1,45,438. The Tribunal modified the order and deducting from the amount of Rs. 4,32,226 the amount of Rs. 2,86,788 (which was already taxed in the hands of the firm) assessed him on an income of Rs. 1,42,641.

The commissioner of income -tax was not satisfied with this and suggested that the following question be referred the High Court under S. 66(1) of the IT Act :

"Whether on the facts and circumstances of the case the Tribunal was right in holding that the losses suffered by the assessee from his personal business cannot be set off under S. 24(1) from his taxed share income from an unregistered firm -
The Tribunal in its referring order observed :
" It is not clear to us in what manner the CIT is invoking the provisions of S. 24(1). Apparently he is referring to the second proviso to S. 24(1) of the Act, but as far as we can make out that proviso has no application to the facts of the present case.
and referred the following questions of law :
"(1) Whether the assessee is required to pay tax on the income of Rs. 1,22,145 or Rs. 1,25,620 at the rate application to Rs. 6,38,579 for the asst. year 1950 -51 ?

(ii) When the assessee is required to pay tax on the income of Rs. 1,42,641 or Rs. 1,45,438 at the rate applicable to Rs. 4,29,429 for the asst. year 1951 -52 ? (The figures are the relevant figures for the asst. year 1951 -52.)"

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