COMMISSIONER OF INCOME-TAX, U.P. vs J. P. KANODIA & CO.

The Supreme Court held that under Section 24(1) of the Income-tax Act, 1922, the Income-tax Officer cannot assess the profits of a registered firm to the families of partners and minors admitted to the partnership benefits, as he must allocate profits according to the partnership deed. The Court reversed the High Court's decision, which allowed the set-off of speculative losses against other business profits, clarifying that such losses are not permissible for set-off. The Court concluded that the Income-tax Officer's order was without jurisdiction and reaffirmed the principles established in Commissioner of Income-tax v. Jagannath Mahadeo Prasad, 71 I.T.R. 296 (S.C.).