JUDGEMENT: AJMAL MIAN, J.--The present reference raises the following question:- "Whether the learned Tribunal was justified in holding that the loss of unregistered firm could be set of against income of other business?"
The brief facts leading to the filing of the above reference are that the respondent is a sole proprietorship firm owned by Mr. Q. M. Deen. It seems that the Income Tax Officer while making assessm ent for the year 1968-69 did not allow the adjustment of the loss suffered by the assessee in relation to an un-registered partnership firm. The assessee being aggrieved by the above order filed an appeal, which was dismissed by the Appellate Assistant Commissioner by his order dated 28-9-67. After that the assessee went in appeal before the Income Tax Appellate Tribunal, which allowed the appeal by an elaborate order dated 3-7-1973. The applicant i.e. Commissioner of Income Tax, Karachi (East Zone) has therefore, filed the present reference and, has solicited the opinion of the Court on the question framed.
2. Mr. Nasrullah Awan, learned counsel for the applicant in support of the above reference has contended that under proviso to section 2A of the Income Tax Act, (hereinafter referred to as the Act) no adjustment of the loss could have been claimed by the respondent assessee.
On the other hand it has been urged by Mr. Muhammad Athar Saeed, learned counsel for the respondent assessee that by virtue of section 10(1) read with section 16(1 )(b), the respondent assessee was entitled to the claim the adjustment of the loss.
3. In support of his contention Mr. Muhammad Athar Saeed has referred to the case of Commissioner of Income Tax v. Feroz-ud-din reported in 1967 Vol. 10 Taxation P. 26, in which a Division Bench of the earstwhile High Court of West. Pakistan, Karachi Bench, while dealing with the identical question after thorough discussion and reference to the relevant case law held that a partner in an un-registered firm can claim ( adjustment of the loss against his individual assessm ent in view of section 10(1) and 16( 1 )(b) of the Act. It was further pointed out that section 2A has no application as it relates to the firms and not to individuals.
4. We see no reason to deviate from view found favour with the Division Bench in the above reported case. We have noticed that the learned Income Tax Appellate Tribunal has dealt with this question elaborately with reference to the case law in the order in question. Our answer to the question framed is, therefore, in the affirmative.
There will be no order as to costs.