{"id":182821,"date":"1966-10-11T00:00:00","date_gmt":"1966-10-10T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-kantilal-nathuchand-sami-on-11-october-1966"},"modified":"2018-09-03T03:29:18","modified_gmt":"2018-09-02T21:59:18","slug":"commissioner-of-income-tax-vs-kantilal-nathuchand-sami-on-11-october-1966","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-kantilal-nathuchand-sami-on-11-october-1966","title":{"rendered":"Commissioner Of Income-Tax, … vs Kantilal Nathuchand Sami on 11 October, 1966"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Commissioner Of Income-Tax, … vs Kantilal Nathuchand Sami on 11 October, 1966<\/div>\n
Equivalent citations: 1967 AIR 632, \t\t 1964 SCR (6) 813<\/div>\n
Author: V Bhargava<\/div>\n
Bench: Bhargava, Vishishtha<\/div>\n
           PETITIONER:\nCOMMISSIONER OF INCOME-TAX, GUJARAT\n\n\tVs.\n\nRESPONDENT:\nKANTILAL NATHUCHAND SAMI\n\nDATE OF JUDGMENT:\n11\/10\/1966\n\nBENCH:\nBHARGAVA, VISHISHTHA\nBENCH:\nBHARGAVA, VISHISHTHA\nSHAH, J.C.\nRAMASWAMI, V.\n\nCITATION:\n 1967 AIR  632\t\t  1964 SCR  (6) 813\n CITATOR INFO :\n F\t    1969 SC 209\t (4)\n D\t    1969 SC1485\t (2,5,7)\n\n\nACT:\nIndian\tIncome-tax, 1922, s. 24--Registered  firm  suffering\nloss in speculation business for two years-Such loss whether\nto  be apportioned among,partners or to be  carried  forward\nand  set off against profit in speculation business  in\t the\nsubsequent year.\n\n\n\nHEADNOTE:\nThe respondent firm had income from property, ready business\nin kappas, and also speculation business.  It was registered\nunder  s.  26A of the Indian Income-tax Act, 1922,  for\t the\nassessment  years  1958-59,  195960  and  1960-61.   In\t the\naccounting periods relating to the assessment years  1958-59\nand  1959-60  the  firm suffered  loss\tin  the\t speculation\nbusiness.  The Income-tax Officer did not set off this\tloss\nagainst\t the income from property and ready kappas  business\nbut  apportioned it between the, partners of the  firm.\t  In\n1960-61 there was profit in the speculation business and the\nfirm claimed that the loss in that business in the preceding\ntwo  years  should,  be set off\t against  the  said  profit.\nAccording  to the firm the Income-tax Officer was  wrong  in\napportioning  the speculation loss between the\tpartners  in\n1958-59\t and  1959-60.\t The plea was not  accepted  by\t the\nIncome-tax Officer or the Appellate Assistant  Commissioner.\nBut  the Tribunal in further appeal, and the High  Court  in\nreference under s. 66A accepted it.  The Revenue appealed to\nthis Court.\nHELD  : (i) The principal clause of s. 24(1) lays down\tthat\nif there be a loss of profits or gains in any year under any\nof  the heads in s. 6, that loss has to be set\toff  against\nthe income profits or gains of the assesses under any  other\nhead in that year.  The first proviso to the clause  however\nlays  down an exception to the above rule, namely, that\t the\nlosses\tsustained in speculative transactions are not to  be\ntaken  into  account  in computing  the\t profits  and  gains\nchargeable  under the head 'profits and gains  of  business,\nprofession or vocation,' except to the extent that they will\nbe  set off against profits and gains in any other  business\nwhich  itself consists of speculative transactions.  In\t the\npresent case the Income-tax Officer was clearly right in the\nassessment years 1958-59 and 1959-60 in not setting off\t the\nlosses in the speculative business against the income earned\nin  those years either from property or from ready  business\nin Kappas. [816 D-H]\n (ii) The Income-tax Officer however erred in  -apportioning\nthe  said speculation loss in the years 1958-59 and  1959-60\nbetween\t the  partners and in not carrying  it\tforward\t and\nsetting it off against the profit in speculation business in\n1960-61.\nThe  second proviso to s. 24(1) in so far as it\t deals\twith\nregistered Arms lays down that any loss which cannot be\t set\noff  against the income profits and gains of the  registered\nfirm  is to be apportioned between the partners of the\tfirm\nand they alone are entitled to have the amount set off under\nthis  section.\tClearly the word 'any loss' here must  refer\nto the loss computed for purposes of the principal clause of\ns.  24(1) taken with the first proviso, and  will  therefore\nnot comprise in it the loss in speculative business which is\nnot  to be taken into account under the first  proviso.\t  If\nthis part of the second proviso were interpreted to  include\nwithin\tit the loss in speculative business Which is not  to\nbe taken into account under the first\n814\nproviso,  the effect of giving a wider meaning to the  words\n'any loss' in it would be that the same loss in\t speculative\nbusiness  would,  after apportionment, be  set\toff  against\nincome profits and gains under other heads in computing\t the\ntotal income of the partners.  The result would be that\t the\neffect of the first proviso would be nullified by this\tpart\nof the second proviso. [817 E-H]\nProviso\t (c)  to s. 24(2) envisages the\t existence  of\tloss\nwhich has not been apportioned between the partners and this\nclearly\t strengthens the view that the second proviso to  s.\n24(1)  does  not  cover loss  in  speculative  business\t and\nconsequently does not permit that loss to be apportioned be-\ntween the partners. [820 E-F]\nSection 23(5)(a) of the Act also could not help the Revenue.\nUnder  the  first proviso to s. 23 (5) (a) the\tshare  of  a\npartner\t in  a loss is required to be set  off\tagainst\t his\nother  income, or carried forward and set off in  accordance\nwith the provisions of s. 24, This proviso however does\t not\nrefer  to  the\tloss  incurred\tby  a  registered  firm\t  in\nspeculative  business which is not to be taken into  account\nwhen computing the total income of the registered firm under\ns. 23(1), (3) and (4) of the Act. [818 H]\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 676 of
\n1965.\t  Appeal from the judgment and order dated September
\n13,
\nAppel from the judgment and  order dated September 13,16,  1963
\nof the Gujarat High Court in Income-tax Reference No.  2  of
\n1963.\n<\/p>\n
B.  Sen,  T.  A.  Ramachandran, S.   P.\t Nayyar\t and  R.  N.
\nSachthey, for  the appellant.\n<\/p>\n
K.  R.\tChaudhuri, and K. Rajendra Chaudhuri, for  the\tres-
\npondent.\n<\/p>\n
Bhargava, J. The respondent is a firm which, for purposes of
\nassessment under the Income-tax Act (hereinafter referred to
\nas  “the Act”), was registered under section 26A of the\t Act
\nduring\tthe assessment years 1958-59, 1959-60, and  1960-61.
\nThe  respondent\t was  earning income  from  property,  ready
\nbusiness  in  kappas,  and also\t from  speculation  business
\ncarried\t on an extensive scale.\t During the assessment\tyear
\n1958-59,  the  income  from property  was  assessed  at\t Rs.
\n1,369\/- and from ready business at Rs. 28,449\/-.  There\t was
\na  loss of Rs. 6,26,606\/- in the speculation business.\t The
\nIncome-tax Officer, in making the assessment for that  year,
\ncharged\t tax  on the total of the income from  property\t and
\nready business which amounted to Rs. 29,818\/-.\tThe loss  of
\nRs.  6,26,606\/- was not set off against this profit in\tview
\nof  the provisions of the first proviso to S. 24(1)  of\t the
\nAct.   This  loss  was,\t however,  apportioned\tbetween\t the
\npartners by the Income-tax Officer, purporting to act  under
\nthe  second proviso to the said subsection.   Similarly,  in
\nthe  next  assessment year 1959-60, where there\t was  income
\nfrom  property\tand  loss  in  ready  business\tas  well  as
\nspeculation  business,\tno tax was imposed, as the  loss  in
\nready  business exceeded the income from property.  The\t net
\nloss of Rs. 1,239\/- worked out on the basis of loss in ready
\nbusiness reduced
\n815<\/span>
\nby  the\t income from property, was apportioned\tbetween\t the
\npartners.  Further, the speculation loss of Rs. 5,416\/-\t was
\nalso  apportioned between the partners on the same basis  as
\nwas  done in the preceding assessment year 1958-59.  In\t the
\nassessment year 1960-61, there was an income of Rs.  1,014\/-
\nfrom  property,\t and  a\t loss of  Rs.  21,197\/-\t from  ready
\nbusiness.  In addition, there was a profit of Rs. 6,19,784\/-
\nin  the speculation business.  Since this year there  was  a
\nprofit\tin  speculation business, the first  proviso  to  s.
\n24(1)  did not apply, and the net income of  the  respondent
\nwas worked out by taking all the three figures into account.
\nThe  respondent\t claimed  that\tin  the\t assessment  of\t the
\nrespondent’s  income  in  this\tyear,  the  respondent\t was
\nentitled  to  set  off the speculation\tlosses\tof  the\t two
\npreceding  assessment years 1958-59 and 1959-60 against\t the
\nprofits\t earned\t from  speculation business  in\t this  year,
\nurging that the Income-tax Officer in the two earlier  years
\nwas  wrong  in apportioning the loss between  the  partners.
\nThe plea was that under the second proviso to s. 24(1), this
\nloss  in  speculation  business\t could\tnot  be\t apportioned
\nbetween the partners, and consequently, under s. 24(2),\t the
\nrespondent  was entitled to carry forward this loss  and  to
\nhave it set off against the profit from speculation business
\nunder clause (i) of s. 24(2).  This plea was rejected by the
\nIncome-tax Officer whose order was up held by the  Appellate
\nAssistant  Commissioner.  On further appeal, the  Income-tax
\nAppellate  Tribunal,  however,\taccepted  the  plea  of\t the
\nrespondent and held that the speculation losses sustained by
\nthe respondent in the two preceding assessment years must be
\nadjusted  against the profit earned in the account  year  in
\nquestion in speculation business.  Thereupon, at the request
\nof the Commissioner of Income-tax, the following question of
\nlaw  was  referred by the Tribunal for opinion to  the\tHigh
\nCourt of Gujarat
\n\t      “Whether on the facts and in the circumstances
\n\t      of  the case and on a true  interpretation  of
\n\t      the  various provisions of the Indian  Income-
\n\t      tax  Act,\t 1922, the Tribunal was\t correct  in
\n\t      holding\tthat  speculation  losses   of\t the
\n\t      Respondent   firm\t (assessee  firm)  for\t the
\n\t      assessment years 1958-59 and 1959-60 should be
\n\t      set off against its speculation profit of\t Rs.
\n\t      6,19,784\/-  in its assessment for the  assess-
\n\t      ment year 1960-61.”\n<\/p>\n
The High Court upheld the view of the Tribunal and  answered
\nthe  question in favour of the respondent.  This appeal\t has
\nnow  been  brought up to this Court by the  Commissioner  of
\nIncome-tax on certificate granted by the High Court under s.
\n66A(2) of the Act.\n<\/p>\n
The  answer  to\t the question referred\tto  the\t High  Court
\nobviously  depends  on\tthe  interpretation  of\t the  second
\nproviso to s. 24(1) of
\n816<\/span>
\nthe Act.  In interpreting this provision, the purpose of  s.
\n24(1)  and (2) has to be kept in view.\tUnder the  Act,\t the
\nIncome-tax  Officer has to determine the total income of  an
\nassessee  under\t section 23(1), (3) or (4) of the  Act.\t  In
\ndetermining  this total income under all the  various  heads
\nenumerated in s. 6 has to be taken into account.  Sections 7
\nto 10 & 12 lay down the principles on which the income under
\nthese  various\theads  is to be computed.  In  the  case  of
\nincome from business, profession or vocation, the income has
\nto be computed under s. 10(1) of the Act.  Section 10(2)  of
\nthe  Act lays down certain deductions which have to be\tmade
\nin computing the profits and gains from business, profession
\nor  vocation.  It is during this computation to be  made  by
\nthe  Income-tax\t Officer  under s. 23  of  the\tincome\tfrom
\nbusiness, profession or vocation in accordance with s. 10(1)
\nof  the Act that the Income-tax Officer is further  required
\nto  apply the provisions of s. 24.  Section 24 is,  thus,  a
\nprovision  laying  down the manner of computation  of  total
\nincome.\t The principal clause of s. 24(1) lays down that  if
\nthere be a loss of profits or gains in any year under any of
\nthe  heads mentioned in section 6, that loss has to  be\t set
\noff  against  the income, profits or gains of  the  assessee
\nunder  any other head in that year.  If this  provision\t had
\nstood by itself without any provisos, the result would\thave
\nbeen  that all losses incurred by an assessee under  any  of
\nthe  heads  mentioned  in s. 6\twould  be  adjusted  against
\nprofits under all other heads, and then the total income  of
\nthe  assessee would be worked out on that basis.  The  first
\nproviso to this sub-section, however, lays down an exception
\nto this general rule contained in the principal clause.\t The
\nexception  relates  to income from  business  consisting  of
\nspeculative  transactions,  and places the  limitation\tthat
\nlosses\tsustained in speculative transactions are not to  be
\ntaken  into  account  in computing  the\t profits  and  gains
\nchargeable  under the head “Profits and gains  of  business,
\nprofession or vocation”, except to the extent that they will
\nbe  set off against profits and gains in any other  business
\nwhich  itself  consists of  speculative\t transactions.\t The
\neffect\tof  the\t proviso is that if  there  are\t profits  in
\nspeculative  business,\tthose profits are  added  to  income
\nunder  other  heads  mentioned\tin  S.\t6  for\tpurposes  of
\ncomputing  the\ttotal  income of the assessee  in  order  to
\ndetermine  the\ttax under s. 23 of the Act.   On  the  other
\nhand,  losses  in speculative business are not to  be  taken
\ninto account when computing the total income, except to\t the
\nextent\tto  which they can be set off against  profits\tfrom
\nother speculative business.  The first proviso, thus clearly
\nlimits\tthe  applicability  of the principal  clause  of  s.
\n24(1); and, when applied, it governs the manner in which the
\ntotal income of the assessee is to be computed.\t In the case
\nbefore\tus, the Income-tax Officer was clearly right in\t the
\nassessment years 1958-59 and 1959-60 in not setting off\t the
\nlosses in the speculative business against the income earned
\nin  those years either from property or from ready  business
\nin kappas.\n<\/p>\n
817<\/span><\/p>\n
Then  comes  the second proviso, and it is  clear  from\t the
\nlanguage  of  this proviso that it does not  deal  with\t the
\ncomputation  of the income of the assessee for\tpurposes  of
\ndetermining  the  total\t income.  This\tsecond\tproviso\t was
\nincorporated  in  order to indicate the personality  of\t the
\nassessee for the purpose of applying the principal clause of
\ns.  24(1)  taken  together  with  the  first  proviso.\t  No
\ndifficulty could arise in applying the principal clause\t and
\nthe  first  proviso  together in the  case  of\tindividuals,
\ncompanies,  Hindu undivided families, etc.; but a  provision
\nwas  needed  for cases where the assessee happened to  be  a
\nfirm.\tThis necessity arose because of the  special  manner
\nlaid  down  in s. 23 itself for assessing the  income  of  a
\nfirm.  That section lays down different rules for assessment
\nof unregistered firms and registered firms.  In the case  of
\nan  unregistered  firm,\t the total income  computed  by\t the
\nIncome-tax  Officer for determining the tax can be  assessed
\nby  apportioning  that\tincome\tbetween\t the  partners,\t and
\ndetermining the tax payable by each partner on the basis  of
\nsuch assessment, including his income from other sources, as
\nlaid  down in s. 23(5)(b) of the Act.  In  the\talternative,
\nthe Income-tax Officer may choose to assess an\tunregistered
\nfirm  as  a  unit by itself, and in that case,\tthe  tax  is
\ndetermined  as\tpayable by the firm as a unit, so  that\t the
\nprovisions  of\ts.  23(5)(b) are not  applied.\t The  second
\nproviso to s.  24(1) lays down that in such a case where  an
\nunregistered firm is\t not  assessed under the  provisions
\nof clause (b) of sub-section (5) of\ts.  23,\t “any\tsuch
\nloss  shall be set off only against the income, profits\t and
\ngains  of the firm and not against the income,\tprofits\t and
\ngains of any of the partners of the firm.” It is clear\tthat
\nthe  expression “any such loss” in this part of\t the  second
\nproviso can only refer to the loss computed for purposes  of
\napplying  the  principal clause of s. 24(1)  taken  together
\nwith  the first proviso.  That will, therefore, be the\tloss
\nsuffered  by the unregistered firm in businesses other\tthan
\nspeculative business.  The loss incurred in the\t speculative
\nbusiness  by the unregistered firm is, thus, to be  ignored.
\nIf this part of the second proviso were to be interpreted as
\nlaying\tdown  that the loss mentioned therein  includes\t the
\nloss from speculative business, the effect would be that the
\nprovision contained in the first proviso would be completely
\nnullified.   The  effect of the first proviso is  that\twhen
\nsetting\t off  the loss of profits and gains under  one\thead
\nagainst\t income, profits and gains under any other  head  in
\naccordance  with the principal clause, the loss suffered  in
\nspeculative business is not to be taken into account and  is
\nto  be kept apart.  If the word “loss” in the first part  of
\nthe  second proviso were to be interpreted as including\t the
\nloss in speculative business also, the result would be\tthat
\nthe loss excluded under the first proviso would be  included
\nin the assessment of total income under the second  proviso.
\nIn  the circumstances, the only interpretation that  can  be
\nplaced\ton  the words “any such loss” in this  part  of\t the
\nsecond proviso is that this expression refers to the loss as
\n818<\/span>
\ndetermined for purposes of the principal clause of s.  24(1)
\nread  with the first proviso, and, thus, does  not  comprise
\nwithin it loss incurred in speculative business referred  to
\nin the first proviso.\n<\/p>\n
Then  comes  the  second part of the  second  proviso  which
\nprescribes  the\t personality of the assessee  to  which\t the
\nprovisions  of\ts. 24 are to be applied in cases  where\t the
\nassessee  is a registered firm.\t Under this part, the  loss,
\nwhich  cannot be set off against other income,\tprofits\t and
\ngains  of the registered firm, is to be apportioned  between
\nthe partners of the firm and they alone are entitled to have
\nthe amount of the loss set off under this section.  Clearly,
\nin  this part also, the words “any loss” must refer  to\t the
\nloss  computed\tfor purposes of the principal  clause  taken
\ntogether  with the first proviso, and will,  therefore,\t not
\ncomprise in it the loss in speculative business which is not
\nto  be\ttaken  into account under the  first  proviso.\t The
\naspect\tof this provision, which is of importance,  is\tthat
\nunder  it,  the Income-Tax Officer is required to  take\t two
\nsteps.\tThe first is that the loss, which cannot be set\t off
\nagainst\t other income, profits and gains of  the  registered
\nfirm,  has  to be apportioned between the  partners  of\t the
\nfirm,  and  then he has to give effect to the right  of\t the
\npartners to have the amounts of the loss set off under\tthis
\nsection.   Once\t again, if this part of the  second  proviso
\nwere   interpreted  to\tinclude\t within\t it  the   loss\t  in
\nspeculative  business which is not to be taken into  account
\nunder  the  first  proviso, the effect\tof  giving  a  wider
\nmeaning\t to  -the words “any loss” in it would be  that\t the
\nsame\tloss   in   speculative\t  business   would,    after
\napportionment, be set off against income, profits and  gains
\nunder  other  heads  in computing the total  income  of\t the
\npartners.  The result would be that the effect of the  first
\nproviso would again be nullified by this part of the  second
\nproviso.   Consequently, the correct interpretation must  be
\nthat  the  words   ” any loss” in this\tpart  of  the second
\nproviso also refer to the loss computed for the purposes  of
\nthe  principal\tclause of s. 24(1) taken together  with\t the
\nfirst  proviso,\t so that it must also exclude  the  loss  in
\nspeculative  business which is not to be taken into  account
\nwhen  computing\t the  total income  of\tthe  assessee.\t The
\nlanguage  used in the second proviso, thus, itself leads  to
\nthe  conclusion\t that the decision arrived at  by  the\tHigh
\nCourt was correct, even though on a different reasoning.
\nIn  this connection, learned counsel appearing for the\tCom-
\nmissioner  drew\t our attention to the first  proviso  to  s.
\n23(5)(a) of the Act, under which the share of a partner in a
\nloss is required to be set off against his other income,  or
\ncarried\t  forward  and\tset  off  in  accordance  with\t the
\nprovisions  of\ts. 24.\tWe do not think\t that  this  proviso
\nrefers\tto the loss incurred by a registered firm in  specu-
\nlative\tbusiness which is not to be taken into account\twhen
\ncomputing  the total income of the registered firm under  s.
\n23(1), (3) and
\n819<\/span>
\n(4)of the Act.\tSection 23(5)(a) clearly applies only to the
\ntotal income of the firm which has been assessed under\tsub-
\ns.  (1),  sub-s. (3) or sub-s. (4) of s. 23,  and  does\t not
\napply to any other income or loss.  If speculative  business
\nof  a firm has resulted in profit, that profit, as  we\thave
\nindicated   earlier,  would  be\t taken\tinto  account\twhen
\ndetermining the total income of that firm.  But if there  be
\na  net\tloss in all speculative businesses  taken  together,
\nthat loss is not to be taken into account when computing the
\ntotal  income, and consequently, that loss would be  outside
\nthe  scope  of s. 23(5)(a) also.  The first  proviso  to  s.
\n23(5)(a) cannot be, therefore, held to be applicable to loss
\nin  speculative business kept apart under the first  proviso
\nto s. 24(1).\n<\/p>\n
Coming\tto  sub-section (2) of s. 24 on which  reliance\t was
\nplaced\tby  learned counsel for the  Commissioner,  we\tfind
\nthat, instead of supporting the interpretation sought to  be
\nput  on behalf of the Commissioner on the second proviso  to
\ns.  24(1), it supports the view which we have arrived at  on
\ninterpretation of the language of s. 24(1) and its provisos.
\nClause\t(1)  of s. 24(2) lays down that where the  loss\t was
\nsustained  by  an  assessee  in\t a  business  consisting  of
\nspeculative  transactions, it shall be set off only  against
\nthe   profits  and  gains,  if\tany,  of  any  business\t  in
\nspeculative  transactions  carried on by him in\t that  year.
\nThis  is a general provision which is applicable to loss  in
\nspeculative  business suffered by any assessee, including  a
\nfirm, and the limitation that it places is that\t speculative
\nloss, kept apart under s. 24(1) and not set off against\t the
\nincome,\t profits and gains of that earlier year, is only  to
\nbe  set\t off in a subsequent year, if there are\t profits  in
\nspeculative   transactions  of\tthe  same  business.\tThis
\nprovision  is  also,  however, governed\t by  some  provisos,
\nincluding proviso (c) which lays down that : “nothing herein
\ncontained  shall  entitle any assessee, being  a  registered
\nfirm, to have carried forward and set off any loss which has
\nbeen apportioned between the partners, under the proviso  to
\nsub-s.\t(1), or entitle any assessee, being a partner in  an
\nunregistered  firm  which has not been\tassessed  under\t the
\nprovisions  of\tclause (b) of sub-s. (5) of s.\t23  to\thave
\ncarried forward and set off against his own income any\tloss
\nsustained by the firm.” This proviso is again divisible into
\ntwo parts.  One part relates to the case of an\tunregistered
\nfirm  and lays down an absolute prohibition against  setting
\noff  of loss carried forward in the assessment of a  partner
\nof  an\tunregistered  firm, which has  been  assessed  as  a
\nseparate  unit, by omitting to apply the provisions  of\t cl.\n<\/p>\n
(b)  of\t sub-s.\t (5) of s. 23. This  part,  thus,  does\t not
\nenvisage  that,\t in the case of such an\t unregistered  firm,
\nthere  would be any loss which could be apportioned  between
\nthe  partners.\tIn the case of a registered  firm,  however,
\nthe  provision made is in different language.  It lays\tdown
\nthat  “nothing herein contained shall entitle any  assessee,
\nbeing a registered firm, to have carried forward and set off
\nany loss which
\n820<\/span>
\nhas been apportioned between the partners, under the proviso
\nto  sub-section (1).” Thus, it prohibits a claim being\tmade
\nby a registered firm as’ such to set off loss in the  future
\nyear  against  profits\tin that year, which  loss  has\tbeen
\napportioned  between  the partners under the proviso  to  s.
\n24(1).\t That loss would be the loss taken into\t account  in
\ncomputing  the\ttotal  income under s. 23  in  view  of\t the
\nprincipal clause of s. 24(1) read with the first proviso  to
\nit and will, thus, exclude the speculative loss which is not
\ntaken  into  account.\tThe language of\t this  part  of\t the
\nproviso clearly envisages that there could be loss which has
\nnot  been apportioned between the, partners of a  registered
\nfirm,  so  that\t the registered firm can claim\tto  have  it
\ncarried forward and set off in future years.  Clearly,\tthat
\ncan  only  be  the  loss  in  speculative  business  of\t the
\nregistered  firm  which\t is not\t taken\tinto  account,\twhen
\ncomputing the total income of the firm under s. 23, in\tview
\nof,  s.\t 24  (1).   No question could  have  arisen  of\t the
\nLegislature  recognising the possibility of a firm  claiming
\nset  off  of  any loss incurred in an earlier  year  if,  as
\ncontended  on behalf of the Commissioner, even the  loss  in
\nspeculative  business  were to be  apportioned\tbetween\t the
\npartners under the second proviso to s. 24(1) On the  inter-
\npretation sought to be placed on behalf of the Commissioner,
\nloss, other than loss in speculative business, has to be set
\noff against the income, profits and gains under any head  of
\nthe  assessee  in  view\t of S. 24(1)  read  with  its  first
\nproviso, while loss in speculative business would also\thave
\nto  be apportioned under the second proviso leaving no\tloss
\nunapportioned  between the partners.  The fact that  proviso\n<\/p>\n
(c)  to S. 24(2) envisages the existence of loss  which\t has
\nnot   been   apportioned  between   the\t  partners   clearly
\nstrengthens  our  view that the second proviso to  s.  24(1)
\ndoes   not   cover  loss  in   speculative   business,\t and
\nconsequently,  does not permit that loss to  be\t apportioned
\nbetween the partners.  Thus, s. 24(2) also leads to the same
\nconclusion   which   we\t have  arrived\tat  above   on\t the
\ninterpretation of the language of s. 24(1).
\nIn  view of the reasons given by us above, we are unable  to
\nagree with the reasoning adopted by the Bombay High Court in
\nCommissioner  of Income-tax, Bombay City 1, v. Chimanlal  J.
\nDalal  and Co.(1), and cannot accept the view of that  Court
\nthat  the decision given in the present case by the  Gujarat
\nHigh Court was incorrect.\n<\/p>\n
The appeal, therefore, fails and is dismissed with costs.\n<\/p>\n
G.C.\t\t\t\t  Appeal dismissed.\n(1) 57 I.T.R. 285.\n821<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Commissioner Of Income-Tax, … vs Kantilal Nathuchand Sami on 11 October, 1966 Equivalent citations: 1967 AIR 632, 1964 SCR (6) 813 Author: V Bhargava Bench: Bhargava, Vishishtha PETITIONER: COMMISSIONER OF INCOME-TAX, GUJARAT Vs. RESPONDENT: KANTILAL NATHUCHAND SAMI DATE OF JUDGMENT: 11\/10\/1966 BENCH: BHARGAVA, VISHISHTHA BENCH: BHARGAVA, VISHISHTHA SHAH, J.C. RAMASWAMI, V. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-182821","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nCommissioner Of Income-Tax, ... vs Kantilal Nathuchand Sami on 11 October, 1966 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-kantilal-nathuchand-sami-on-11-october-1966\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Commissioner Of Income-Tax, ... vs Kantilal Nathuchand Sami on 11 October, 1966 - 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