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Income‑tax Reference No. 17 of 1972, decided on 15th December, 1981.

‑‑‑ S. 24‑.Mere fact that unregistered firm became registered in same year or following year, there being no change in its legal entity as assessee, its entitlement to benefits under S. 24 could not be taken away.

Commissioner of Income‑tax v. Yousuf & Co. 1967 P T D 161 fol.

Nasrullah A wan for Applicant.

All Athar for Respondent.

Date of hearing : 15th December, 1981.

.‑By this reference under section 66(1) of the income‑tax Act, 1922, the following question has been referred to us for our opinion by the Income‑tax Appellate Tribunal (Karachi Bench) Karachi "Whether on facts and in the circumstances of the case, the Appellate Tribunal was right in the conclusion reached by it that the unabsorbed depreciation of unregistered Firms is liable to be set‑off against the income of the Registered firm."

The facts involved are given in the "Statement of the Case" and we may reproduce para. 2 of the same which is as follows

"The brief facts of the case are that a firm was set tip to the year 1959‑60. The claim of registration was not allowed as the application was found to be barred by time. For the year under dispute vie. 1960‑61 on the basis of this very deed of partnership registration was allowed to the firm "and it was assessed as a registered firm. It will be pertinent to point out here that the constitution of the firm remained the same for both the years. For the first year the applicant had suffered certain losses on account of unabsorbed depreciation and wanted to set off the same during the charge year 1960‑61 but as at the time when the losses were suffered the assessee's status was held to be that of an unregistered firm, the Income‑tax Officer refused to set the losses against .the changed status of a registered firm. The Appellate Assistant Commissioner following the decision of West Pakistan High Court reported as 1967 P T D 161 directed the carry forward and the set off and the Tribunal following that decision of the High Court confirmed this decision of the Appellate Assistant Commissioner. So far as the Tribunal is concerned the issue stands concluded by the decision of the West Pakistan High Court but inasmuch as a question of law does arise, the same is referred to the High Court as formulated above and on the basis of the facts stated."

We have seen the judgment of the then Karachi Bench of the West Pakistan High Court in the care of Commissioner of income‑tax v. Yousuf & Ca. 1967PTD161; which has been relied and followed not only by the Appellate Assistant Commissioner in his order dated 13‑2‑1967 but also by the Tribunal in their order dated 28‑11‑1968 in the instant case. In the aforesaid reported decision, a Division Bench has held that the mere fact that the unregistered firm became registered in the same year or the following year, there being no change in its legal entity, as the assesee, its entitlement to the benefit under section 24 could not be taken away. In the instant case it is an admitted position that the constitution of the firm remained the same for both the years and‑no change (taken place. Mr. Nasrullah Awan was not able to point out any other decision of any superior Court of Pakistan which has taken a different view than that taken in the aforesaid judgment. We see no reason to take a different view and respectfully adopt the view taken therein. In the circumstances; the question referred to us is answered in the affirmative. There will be no order as to costs.

M.Y. M. Reference answered In affirmative.

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