LexSETH JAMNADAS DAGA AND OTHERS versus COMMISSIONER OF TNCOME-TAX, SOUTH BOMBAY
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Voltas Limited v. Its Workmen Wanchoo ]. December 1a. 174 SUPREME COURT REPORTS [1961) Out of this, the tribunal has allowed five months' basic wages as bonus to the respondents which works out at Rs. 16.80 la.cs. In the circumstances it cannot be said that the award of the tribunal is not justified. We do not think that we would be justified in giving any- thing more than what the tribunal has a.warded, because the appellant has to provide for a fund for gratuity, for it is a new concern which took over the old employees of another concern when it was started and has thus a greater liability towards gratuity than otherwise would be the case. We are therefore of opinion that the tribunal's award of five months' basic wages as bonus for the year in dispute should stand. We therefore dismiss both the appeals. In the circumstances we pass no order as to costs: Appeals dismissed. SETH JAMNADAS DAGA AND OTHERS v. COMMISSIONER OF TNCOME-TAX, SOUTH 'BOMBAY (J. L. KAPUR, M. HIDAYATULLAH and J. c. SHAH, JJ.) Income-tax-Two firms registered and another unregistered- focome from unregistered firm, if can be set off against loss from registered firms-Losses of the registered firm, if can be carried forward in subsequent year-Indian Income-tax Act, 19zz (II of 19aa), ss. 14(a), 16(r)(a) and 24(r). The appellants were partners of two registered firms and another firm which was unregistered. Their profit and loss for the assessment year I948-49 were as follows:-From registered firms Rs. n,902 loss, I,265 loss, total loss Rs. x3,167. Income from the unregistered firm Rs. 26,no profit, other income Rs. 262. The income of the unregistered firm was taxed on the firm. In assessing the amount of Rs. 262 the Income-tax Officer first determined the total income of each of the appellants by setting off their share of the profits of the unregistered firm against their share of the loss of the registered firm. The appeal to the Appellate Assistant Commissioner being unsuccessful appeals ;- \ ' I ( f l i ,.~ ... 3 S.C.R. SUPREME COURT REPORTS 175 were taken to the Tribunal which relying on the decisions in 1960 Commissioner of Income-tax v. Ratanshi Bhavanji, [1952] 22 I.T.R. 82, held that just as loss in an unregistered fiun could not be Seth ]am11adas set off against profits from a registered firm, the profits in an Daga ©- Others unregistered firm could not be set off against the loss from a regis- v. tered firm. On a reference being made to it the High Court Commissioner of differed from the decision of the Tribunal. and held that the pro· Income-tax, South fit from the unregistered firm could be set off against the loss Bombay from the registered firms to find out the rate applicable to Rs. 26~ which was other income of the assessees. • The High Court fur- ther held that the assessees could not carry forward the loss of the registered firms to the following year, because such loss must be deemed to have been absorbed in the profits of the unregis- tered firm. On appeal with a certificate of the High Court, Held, that the view of the High Court that under ss. 14(2) and 16(1)(a) the profit and loss had to be set off against each other to find out the total income, and that although the share of a part- ner in the profits of an unregistered firm is exempt trom tax, it is included in his total income for the purpose of rate only, was correct but the High Court erred in holding that the losses suffered by the registered firms could not be carried forward because they had been absorbed by the profits of the unregis- ttred firm. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 516of1959. Appeal from the judgment and order dated Septem- ber 3, 1957, of the Bombay High Court in Income- ta.x Referenoe No. 49 of 1957. J. M. Thakar, S. N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellants. A. N. Kripal and D. Gupta, for the respondent. 1960. December 12. The Judgment of the Court was delivered by HIDAYATULLAH, J.-The three appellants appeal Hidayatulld /. against the judgment and order of the High Court of Bombay answering, in the affirmative, the following question: "Whether the share income of the a.ssessees from the unregistered firm (which is separately taxed), namely, Rs. 26,110 can be set off against their share loss from registered firms, namely, Rs. 13,167?" The facts a.re a.s follows: Two of the appellants a.re 176 SUPREME COURT
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