HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
The Commissioner of Income-tax, Bombay City II, Bombay v. M/s. Jadavji Narsidas & Co.
Civil Appeal No. 545 of 1961
[1963] Supp 1 SCR 609 ·
Indian Income-tax Act, 1922: sections 16(1)(b), 23(5), 24 and 66(2)
Holding and result. The Court found no evidence supporting the conclusion that the venture was fictitious, but held that a firm as such could not partner with an individual and the unregistered venture’s loss could not be set off against the registered firm’s profits. Each side succeeded on one referred question.
Sources & disclosures includedDownload original judgment / order
Three-judge bench; majority judgment delivered by M. Hidayatullah, J.; A. K. Sarkar, J. wrote separately. · J. L. Kapur, J. · A. K. Sarkar, J. · M. Hidayatullah, J.
Assessment years: 1946-47
01 · Facts of the case
The registered assessee firm claimed Rs.1,05,641 as its share of a speculative loss from a venture with Damji Laxmidas, treated as an unregistered firm. The officer and Tribunal rejected the claim, questioning whether the joint business existed and also treating an unregistered firm’s loss as unavailable in the assessee firm’s assessment.
02 · Discussion by the Hon’ble Court
A section 66 reference does not permit ordinary appellate reweighing, but a no-evidence finding cannot rest on conjecture. The record showed a real course of business and did not support “purchase of losses.” Legally, however, the registered firm could not itself partner with Damji; any venture was between Damji and the four partners individually. The 1922 Act confined an unregistered firm’s loss to that firm’s own profits.
03 · Judicial decision
The High Court’s affirmative answer on absence of evidence was upheld. Its answer permitting the registered firm to set off the unregistered venture’s loss was set aside and answered in the negative. Possible treatment in the partners’ individual assessments was left open.
04 · Outcome / in whose favour
The Commissioner succeeded only on the second question. Because success was divided, the parties were directed to bear their own costs in the Supreme Court and High Court.
05 · AKHB REVIEW POINT
AKHB analysis: separate proof that a venture existed from the legal identity of the assessee entitled to use its loss. A valid factual finding about a venture does not itself permit one firm to absorb another unregistered venture’s loss. Current partnership-loss treatment must be checked under the present statute.
Source & verification
Download original judgment / order · Open cited source rendition
Complete 16-page SCR asset read in page-preserving text and every page image inspected; the opening lines conclude the preceding Chockalingam report and the Jadavji report then runs through its final order.
- Exact catalogue SHA-256 and 16-page count verified; the complete report was read and every source page image inspected.
Statutory scope
The decision concerns the distinct treatment of registered and unregistered firms under sections 16, 23 and 24 of the Indian Income-tax Act, 1922.
Later treatment
Source checked 2026-10-12. No comprehensive later-treatment or present-law clearance is represented. This note reports a historical loss-set-off decision under the 1922 Act.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
AI disclosure & professional disclaimer
This AKHB research note was prepared with AI assistance from the identified primary report and has not been represented as independently human-reviewed.
General legal and tax research only; not legal or tax advice. Verify the complete judgment, governing statutory version and subsequent judicial treatment before reliance. The AKHB REVIEW POINT is editorial analysis, not the Court's holding, and no current-law clearance is claimed.