P.B.Mukharji, J. - (1.) This is an Income-tax Reference under Section 66(1) of the Indian Income-tax Act. Two questions have been referred to this Court for determination. They are as follows :-- "(1) Whether, on the facts and circumstances of this case, the assessee was at all entitled to set off the loss of Rs. 11,875 suffered by it on a joint venture against its other income ? (2) If the answer to question (1) be in the affirmative, then whether the assessee was entitled to claim a set off of the whole of the said amount of loss against its profits assessable for the assessment year 1959-60."
(2.) The facts giving rise to these two questions must be recorded at the outset. The assessee is Ganga Metal Refining Company (Private) Limited of 43, Strand Road, Calcutta. The status of the assessee is recorded as "company". It is a company incorporated under the Indian Companies Act. The year of assessment is 1959-60. The assessee claimed a deduction of Rs. 11,875 as its share of loss in a joint venture. The assessee company's case is that it entered into a joint venture with two other companies, namely, (1) Binani Brothers Private Limited, Calcutta, and (2) Binani Commercial Company Private Limited, Bombay, for the purchase and sale of certain quantity of white metal slag and dust. 656 cwt. of those articles were purchased on 31st May, 1954. Those articles were sold in parts on several dates which the Tribunal records as falling within the accounting years 1955-56, 1956-57, 1957-58 and 1958-59. The last and final sale of these articles took place on the 18th April, 1958. The assessee company's case is that the accounts for the joint venture were maintained in the books of Binani Brothers Private Limited. On the basis of those accounts, the final result of the joint venture was a loss and the assessee's one-third share of that loss amounted to Rs. 11,875.
(3.) Originally, those articles were purchased on the 11th May, 1954, by Messrs. M. Gholam Ali Abdul Hussein and Co., in an auction at Kharagpur for Rs. 66,000. On or about the 31st May, 1954, the said lot was purchased at Rs. 99,900 by the assessee and the two other said companies. Those purchases, according to the agreed statement of facts before this Court, were made by these three companies including the assessee in a joint venture, wherein those three companies agreed to share the profits or losses resulting from the sale of those goods in equal shares. The characteristic features of what are normally associated with a partnership in the facts of this case are equal sharing of profits or losses.;