Choudhary Cotton Ginning and Pressing Factory vs Commissioner of Income Tax

Chinnappa Reddy, Actg. C.J.—The Income Tax Appellate Tribunal, Chandigarh, has referred for our decision the following question :

"Whether, on the facts and in the circumstances of the case, the assessee-firm is entitled to claim the carry forward of the losses of the registered firm even in spite of Section 75(2) of the Income Tax Act ?"

There can only be one answer in the reference and that has to be against the assessee. Section 75(1), Section 73(2), Section 74(1) and Section 74A(3) provide for the carrying forward and set off of losses of an assessee. Section 75(2) is an exception to these provisions and it provides that a registered firm will not be entitled to carry forward and set off the losses under these provisions. The reason for this provision is found in Section 75(1), which entitles the partners of the firm to have the losses of the firm apportioned between them and to carry forward and set off the apportioned loss in accordance with the provisions of Sections 71, 72, 73, 74 and 74A. In view of Section 75(2) of the Income Tax Act, the question referred to us is answered against the assessee. No costs.