COMMISSIONER OF INCOME-TAX, ANDHRA PRADESH,HYDERABAD vs A. DHARMA REDDY, MORTHAD

The Supreme Court ruled that under Section 24(2)(ii) of the Income-tax Act, 1922, as amended in 1955, losses from a dissolved partnership can be set off against profits from another firm in a subsequent year. The Court clarified that it is not necessary for the same partnership to continue for the benefit of the provision to apply; rather, the business activity must continue. The appeal by the Revenue was dismissed, affirming the High Court's decision in favor of the assessee.