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PUNJAB & HARYANA HIGH COURT
O.Chinnappa Reddy and M.R.Sharma JJ.
Choudhary Cotton Ginning And Pressing Factory
Versus
Commissioner Of Income-tax
Income tax Reference No. 22 of 1973,
Decided On : OCTOBER 19, 1976
Section 75(2) - Carry Forward of Losses - The court held that a registered firm is not entitled to claim the carry forward of losses under Section 75(2) of the Income-tax Act, as it is an exception to the provisions allowing carrying forward and set off of losses for an assessee. The provision is based on Section 75(1) which entitles partners of the firm to apportion the losses and carry forward and set off the apportioned loss.
Fact of the Case:
The Income-tax Appellate Tribunal referred the question of whether the assessee-firm is entitled to claim the carry forward of losses of the registered firm despite Section 75(2) of the Income-tax Act.
Finding of the Court:
The court found that the answer to the reference had to be against the assessee, as Section 75(2) is an exception to the provisions allowing carrying forward and set off of losses for an assessee.
Issues: The main issue was whether the assessee-firm is entitled to claim the carry forward of losses of the registered firm despite Section 75(2) of the Income-tax Act.
Ratio Decidendi: The court's decision was based on the interpretation of Section 75(2) as an exception to the provisions allowing carrying forward and set off of losses for an assessee, and its relation to Section 75(1) which entitles partners of the firm to apportion the losses and carry forward and set off the apportioned loss.
Final Decision: The question referred to the court was answered against the assessee, and no costs were awarded.
Chinnappa Reddy, J.
1. 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 ?"
2. 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.
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