(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 asscssec 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.

(4) IN the further appeal before the Income Tax Appellate tribunal the asscssee succeeded, the tribunal having placed reliance upon a decision of the Karnataka High court in T.P. Kapadia v. COMMISSIONER OF INCOME TAX . The revenue sought a reference to the High court on a question of law. The tribunal, being of the opinion that a question of law did arise referred the question for the opinion of this court directly under S. 257 of the Act, in view of the divergence of judicial opinion between the Karnataka and Gujarat High courts on the question.

(5) DR Gourishankar, learned Sr. Adv. for the revenue, sub mitted that S. 64(1(i) of the Act, which corresponded to Section 16(3(a)(i) of the 1922 Act, clearly envisaged an artificial liability and that though the expression "income" might, in certain circumstances, include "negative income" also, however, such a construction was excluded by the manifest intention in S. 64(1(i). The two expressions "income" and "shall be included" in S. 64(1, it was urged. clearly excluded any concept of such "negative income" as the idea was clearly one of adding rather than one of subtracting or set-off. Dr Gourishankar said that the provision was intended to curb a tendency on the part of the tax payer to endeavour to avoid or reduce liability to tax by distributing the sources of income to the spouse so that the income could not, in law, be said to be received by him, he would yet retain certain power over the source - and the income itself. But, he urged, where the statutory language was plain and unambiguous there would arise no need to resort to any process of interpretation so as to give the statutory language a meaning to accord with its supposed intention. The plain meaning of a provision, it was said, must be given ef