THE COMMISSIONER OF INCOME-TAX,BOMBAY CITY II, BOMBAY vs M/s. JADAVJI NARSIDAS & CO.

The Supreme Court held that under Section 24 and Section 66(2) of the Indian Income-tax Act, 1922, a registered firm cannot claim a set-off for losses incurred in an unregistered firm. The Court found that the High Court erred in allowing the set-off, as the partnership with the unregistered firm was not legally valid. The judgment clarified that the Appellate Tribunal's findings must be adequately reasoned to be binding, and that a firm cannot enter into a partnership with another firm or individuals, reaffirming the principle established in Dulichand Lakshminarayan v. The Commissioner of Income-tax, Nagpur.