- (1.) This is a reference under S. 257 of the Income Tax Act, 1961 (Act) made by the Income Tax Appellate tribunal, Madras B bench in r. A. No. 187/mds/75-76 arising out of ITA No. 1480/mds/l/72-73 stating a case directly before this court and referring the following question of law for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the assessee is entitled to carry forward to subsequent years not only his share but also the share of loss of his wife from the firm of Messrs Dhanalakshmi Pictures, Vellore -
(2.) The reference was made to this court directly on the view that having regard to the difference of judicial opinion in the High courts recourse should be had to S. 257 of the Act. The assessee, whose assessable status was that of an "individual", was a member of a firm of partners carrying on business in the name and style Messrs Dhanalakshmi Pictures, Vellore, in which he had a half share in the profits and losses, his wife, the other partner, having the other half share. For the assessment year 1968-69, the assesses filed a return declaring a loss of Rs. 30,945. 00 which was arrived at by including the assessees own share of loss of Rs. 15,473. 00 from the business of the firm and the share of loss of Rs 15,472 of the assessees wife in the same firm. The assessee claimed that not only his share of the loss but also that of loss of his wife in the firm should be carried forward to subsequent years for being set off against his future business income.
(3.) The Income Tax Officer held that it was only where the assessees wife made an income that such income would become includible in the total income of the assessee under S. 64 (1) (i) and that where there was only a loss in the case of the wife, such loss could not be set off against or added lo, the income or loss, as the case may be, of the assessee. The assessment was concluded accordingly. In the first appeal preferred before the Appellate Assistant Commissioner of Income Tax, the appellate authority following the decision of the Gujarat High court in Dayalbhai Vadera v. CII upheld the view of the Income Tax Officer and dismissed the appeal.;