THE COMMISSJONER OF INCOME-TAX, BOMBAY CITY II, BOMBAY versus M/S. JADAVJI NARSIDAS & CO.

Citation: [1963] SUPP. 1 S.C.R. 609 · Decided: 12-10-1962 · Supreme Court of India · Bench: J.L. KAPUR

Judgment (excerpt)

l s.c.R. SUPREME COURT REPORTS 
609 
of the assessee and in our opinion this was such a 
case. 
1962 
M. Chockalingam 
v. 
In the result the appeals, are allowed. 
A writ 
of Certiorari will issue and the order of the Income-
tax Officer will be quashed. The Income-tax Officer 
will, however, be free to take such action as may be 
open to him. 
In the circumstances of the case, the 
parties will bear their costs here and in the High 
Court. 
Commissioner of 
fncomt-tax, Madras 
Appeals allowed. 
THE COMMISSJONER OF INCOME-TAX, 
BOMBAY CITY II, BOMBAY 
v. 
M/s. JADAVJI NARSIDAS & CO. 
(J. L. KAPUR, A. K. SARKAR and M. 
HIDAYATULLAR, JJ.) 
Income Tax-Set-off-Profits of regi•tered firm and· loss 
incurred in unregistered firm-Findings of Tribunal-When 
binding on High Court-Indian Income-tax Act, 1922 (11 of 
1922), SS, 24, 66 (2). 
The respondent, a fir:n consisting of fonr partners, was 
registered under the Indian Income-lax Act, I 922. 
For the 
assessment year 
1946-4 7 it claimr.d to set off a sum of 
Rs. 1,05,641, as its share of the loss in respect of certain 
transactions said t? have beei: carried on i~ the name of D by 
another partnership be'.".'een '.t and D, wh1~h was not registered. 
The income-tax au~honU~s reJe~t.ed the clallll and the Appellate 
Tribunal a~reed with theu decmon on the grounds (1) that it 
being admitted that the ankdas were in the name of D there 
was no satisfactory evidence that the assessee did business' in the 
joint account, and (2) that, in any case, the asi:;essee could not 
claim the set-off as the loss was suffered by an unregistered firm. 
Hidayatullah, J. 
1962 
October, 12. 
1962 
Commissicm1r of 
lncorn,..lax, Bombay 
City 11, Bombay 
v. 
M/s. JadfJ1Jji 
Narsidaf & Cn. 
610 SUPREME COURT REPORTS [1963] SUPP. 
On a reference, the High Court held ( 1) that there was no legal 
admissible evidence to justify the Tribunal's finding that the 
transactions in question were not those of the assessee, and (2) 
that the assessee firm could claim a set-off in respect of the 
share of loss in the unregistered firm "if the income-tax autho-
rities did not proceed to determine the losses of the unregistered 
firm and did not bring it to tax as permitted bys. 23 (5) (b)." 
HeU, that the High Court erred in its view that the asses-
see firm could claim a set-off in respect of the loss incurred in 
the unregistered firm. 
Helil, further (per Kapur and Hidayatullah,.JJ.) : (1) that 
if under s. 66 of the Indian Income-tax Act, J 922, a finding 
given by the Appellate Tribunal is to be considered final, it is 
necessary that the reasons for reaching it should be stated by the 
Tribunal with sufficient fullness to inform all concerned what 
they are. 
(2) that there could not be a partnership between D and 
the regiscered firm. If there w~s a partnership it was between 
D and the four partners of the assessee firm in their individual 
capacity, and under the provisions of s. 24 of the Act the loss of 
Rs. 1,05,641 could not be set off against the profits of the 
registered firm. 
Per Sarkar, J .-In view of the decision in Dulicharul, Laksh-
minarayan v. The Commissioner of Income-ta.1', Nagpur, [1956] 
S. C R. 154, that a firm as such is not entitled to enter into 
partnership with another firm or indiuiduals, the assessee firm 
could not in law enter into partnership with D, and the ques-
tions answered by the High Court did not really arise in the 
present case. 
CIVIL APPELLATE JURISDICTION : Civil Appeal 
No. 545 of 1961. 
Appeal from the judgment and order dated 
October 23, 1958, of the Bombay High Court in 
Incorne-tax Reference No. 23 of 1958. 
K. N. Rajagopal 8astri and R. N. Bachthey, 
for the appellant. 
Purw;hottam Trikamrlas, 8. N. Andley, &mesh-
war Nath and P. L. Vohra, for the respondent. 
l S.C.R. 
SUPREME COURT REPORTS 
611 
1962. 
October 12. The following judgments 
were delivered. 
The judgment of Kapur and Hida-
yatullah, JJ., was delivered 
by Hidayatullah, J., 
Sarkar, J., delivered a separate judgment. 
HIDAYATULLAH, J.- This is an appeal by the 
Commissioner of Income-tax, Bombay, against the 
judgment and order of the High Court of Bombay 
dated October 23, 1958, by which the High Court 
answered two questions referred to it under s. 66 (2) 
of the Income-tax Act in favour of the respondent 
Jadavji Narsidas & Co. 
The High Court certified 
this case as fit for appeal to the Supreme Court and 
hence this appeal. 
The facts are simple. The year of account is the 
S. 

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