Appeals Nos
148 to 150 of 1960
Appeals by special leave from the judgment and order dated October 31 1956 of the former Nagpur High Court in Misc
Civil Case No 184 of 1953
K N Rajagopala Sastri and D Gupta for the appellants
J M Phakar section N Andley J B Dadachanji and Bameshwar Nath for the respondents
March 7
The Judgment of the Court was delivered by HIDAYATULLAH J
These appeals by special leave have been filed by the Commissioner of Income tax Madhya Pradesh against the assessee an individual by name Seth Khushal Chand Daga
The assessee was a partner in a firm Messrs R B Bansilal Abirchand of Nagpur
In the year of account ending Diwali 1941 he received his share of assets and property from this firm and started business of his own
In the same year his sources of income were speculation allowance from Government as treasurer house property and dividends
The assessee had received some profits from his share in an unregistered firm against which were set off his losses in his individual business and the Income tax Officer who made the assessment determined the loss to be carried forward at Rs 53840
The assessee appealed against the assessment but did not question the loss which had been determined
For the year 1942 43 the assessee claimed to reopen the question of the loss to be carried forward stating that it was Rs 211760
This contention was not accepted by the Department and on appeal by the Tribunal
The contention was however raised again by him in the assessments for the years 194849 and 1949 50
In these years he had profits from 188 his share in the unregistered firm Rs 182773 and Rs 139922 respectively against which were set off his losses in his individual business Rs 118913 and Rs 60589 respectively
The contention of the assessee was that the profits which he had derived
from the unregistered firm could not be set off against the loss in his individual business as the profits of the unregistered firm had borne tax not in his hands but in those of the firm
This contention was rejected by the Department but on appeal to the Tribunal it was accepted
On the Tribunal being moved to make a reference it referred four questions
Two of those questions dealt with matters also arising out of these assessments but they have not been mentioned by us in this judgment
The two questions pertaining to these appeals were 1 Whether the assessee was competent in law to raise a question with regard to the determination of loss for the assessment year 1941 42 as finally determined in appeal in the course of proceedings for the assessment year 1942 43 when the loss brought forward from 1941 42 was being set off  2 Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the loss suffered by the assessee from his personal business including his share of  loss from another firm cannot be set off under Section 241 against his taxed share income from an unregistered firm These questions were answered by the High Court against the Commissioner who has now appealed with special leave
It was conceded by the learned counsel for the Commissioner that the second question has now been decided by this Court in Seth Jamnadas Daga vs The Commissioner of Income Tax 1 and that the answer must be against the Department
That portion of the case was thus not argued
As regards the first question the only contention raised was that the loss which had been determined and ordered to be carried forward must be deemed to 1  189 have become final because no appeal was filed against that determination
But it appears that the procedure laid down by a 243 under which the Income tax Officer has to notify to the assessee by order in writing the amount of the loss as computed by him for the purposes of that section was not followed
No doubt under section 30 an appeal lies if the assessee objects to the amount of loss computed and notified under section 24 but inasmuch as the Income tax Officer had not notified the loss computed by him by order in writing an appeal could not be taken on that point
In our opinion the assessee was therefore entitled to have the loss re determined in a subsequent year
Learned counsel for the Commissioner stated that the Department was not very anxious for the decision because this particular assessee has had only losses in the years following and no loss would be occasioned to the Revenue if the losses brought forward be redetermined
But that is a matter with which we are not concerned
In our opinion the judgment of the High Court impugned before us was correct in the circumstances of the case
The appeals fail and are dismissed with costs
One hearing fee
Appeals dismissed


Summary:
The Industrial Tribunal on a reference under section 12 Of the  framed a gratuity scheme for the appellant company
The company challenged the validity of some of the provisions of the scheme on the grounds inter alia 1 that the scheme was framed on the basis of the units while it should have been done on industry cum region basis 2 that the scheme provided for the award of gratuity on the retirement or resignation of a workmen after ten years  service instead of fixing the period as fifteen years and 3 that cl
iib of the scheme which provided that if a workman was dismissed or discharged for misconduct causing financial loss to the works gratuity to the extent of the loss should not be paid to the workman concerned was erroneous because on principle misconduct put a blot on the characterof his service and that disqualified him from any claim of gratuity
Held1 that industry cum region basis is not the only basis on which a gratuity scheme could be framed and one framed on the basis of the units cannot be challenged as in valid
The Bharatkhand Textile Manufacturing Co Ltd vs The Textile Labour Association Ahmedabad   explained
2 that the clause in the scheme prescribing ten years  minimum service to enable an employee to claim gratuity is valid
The Express Newspapers P Ltd vs Union of India  explained
3 that gratuity is not paid to an employee gratuitously or merely as a matter of boon but is paid to him for the service rendered by him to the employer consequently he should not be wholly deprived of the benefit thus earned by long and meritorious service even though at the end of such service he might have been found guilty of misconduct which entailed his dismissal
Accordingly cl
iib of the scheme is a valid provision