The share loss of an unregistered firm can be set off against the share income from several businesses in British India.

1. Under Section 66(1), Income Tax Act the Appellate Tribunal, Bombay, referred the following question: Whether on the facts of the case the share of loss of Rs. 7,226-0-0 arising from the Jaipur firm can be set off against the profit accruing to the Assessee in British India, under Section 24(1), Income Tax Act?

By an order dated 31-1-1950, it was held by us that on the statement of the case the question referred should have been: Whether on the facts of the case the share loss of Rs. 7,226-0-0 arising from the Jaipur firm could be set off against his share income from the several businesses in British India in computing income of the Assessee under the head 'business'?

In view of the emphatic statement of their Lordships of the Privy Council in - Commr. of Income Tax, Bihar & Orissa v. Kameshwar Singh of Darbhanga, 1933 AIR(PC) 108(A) we did not accept the argument of the Assessee that we could resettle the question and give our opinion thereon. Acting under Section 66(4) of the Act, we therefore referred the case back to the Appellate Tribunal to state such additional facts as may be necessary and refer to us for opinion the question which we held arose from the facts of the case. Accordingly the Appellate Tribunal referred that question to us but did not add to the facts already stated. The Appellate Tribunal, however, went beyond its powers in referring the case in the manner it did. We will advert to that in some detail later on.

2. The question now referred to us is: Whether on the facts of the case the share loss of Rs. 7,226-0-0 arising from the Jaipur firm could be set off against his share income from the several businesses in British India in computing income of the Assessee under the head 'business'?

3. The Assessee, an individual, who is a resident and an ordinary resident of British India, was a partner in various registered firms in British India in the year ending Divali 1944 which is the "previous year" of the assessment year 1945-46'. Setting off losses of his share income in some firms against the share income in the others, his total income from the business of the several registered firms in British India, of which he was a partner, was Rs. 44,074-0-0. His income from property was computed at Rs. 5,398-0-0. The Assessee was a partner in the relevant year in a firm at Jaipur, in an Indian State, where he suffered a share loss of Rs. 7,226-0-0. His claim for deduction of this loss was negatived by the Income Tax authorities and the Appellate Tribunal.

4. At the instance of the Assessee the Tribunal referred to this Court under Section 66(1) of the Act the question which according to it arose out of its order. By our order dated 31-1-1950 we held that the assesses was not entitled to set off this loss against the income from property.

5. Under Section 4(1)(a), (b)(i) and (ii) of the Act, subject to the provisions of the Act, the total income of any previous year of any person who is a resident and an ordinary resident of British India during such year includes all income, profits and gains from whatever source derived which are received or deemed to be received in British India in such year by or on behalf of such person or which accrued or arose or deemed to have accrued or arisen to him in British India during such year or which accrued or arose to him without British India during such year. When the Assessee is a partner in a firm, his share income or share loss has to be computed in the manner provided by Section 16(1)(b) and included in his total income; and under the proviso to that Sub-section if the share so computed is a loss, such loss may be set off or carried forward and set off in accordance with the provisions of Section 24.

Under Section 14(2)(a) tax is not payable by an Assessee if he is a partner of an unregistered firm in respect of his income computed in the manner laid down in Section 16(1)(b) on which tax has already been paid by the firm. But if such income is from an unregistered firm