(1) THIS is a reference under S. 257 of the Income Tax Act, 1961 (Act) made by the Income Tax Appellate tribunal, Madras B bench in R.A. No. 187/MDS/75-76 arising out of ITA No. 1480/Mds/l/72-73 stating a case directly before this court and referring the following question of law for the opinion of this court: "WHETHER, on the facts and in the circumstances of the case, the assessee is entitled to carry forward to subsequent years not only his share but also the share of loss of his wife from the firm of Messrs Dhanalakshmi Pictures, Vellore?" (2) THE reference was made to this court directly on the view that having regard to the difference of judicial opinion in the High courts recourse should be had to S. 257 of the Act. The assessee, whose assessable status was that of an "individual", was a member of a firm of partners carrying on business in the name and style Messrs Dhanalakshmi Pictures, Vellore, in which he had a half share in the profits and losses, his wife, the other partner, having the other half share. For the assessment year 1968-69, the asscssec filed a return declaring a loss of Rs. 30,945.00 which was arrived at by including the assesseeS own share of loss of Rs. 15,473.00 from the business of the firm and the share of loss of Rs 15,472 of the assesseeS wife in the same firm. The assessee claimed that not only his share of the loss but also that of loss of his wife in the firm should be carried forward to subsequent years for being set off against his future business income. (3) THE Income Tax Officer held that it was only where the assesseeS wife made an income that such income would become includible in the total income of the assessee under S. 64(1 )(i) and that where there was only a loss in the case of the wife, such loss could not be set off against or added lo, the income or loss, as the case may be, of the assessee. The assessment was concluded accordingly. In the first appeal preferred before the Appellate Assistant Commissioner of Income Tax, the appellate authority following the decision of the Gujarat High court in Dayalbhai Vadera v. CII upheld the view of the Income Tax Officer and dismissed the appeal. The assessment was concluded accordingly. In the first appeal preferred before the Appellate Assistant Commissioner of Income Tax, the appellate authority following the decision of the Gujarat High court in Dayalbhai Vadera v. CII upheld the view of the Income Tax Officer and dismissed the appeal. (4) IN the further appeal before the Income Tax Appellate tribunal the asscssee succeeded, the tribunal having placed reliance upon a decision of the Karnataka High court in T.P. Kapadia v. COMMISSIONER OF INCOME TAX . The revenue sought a reference to the High court on a question of law. The tribunal, being of the opinion that a question of law did arise referred the question for the opinion of this court directly under S. 257 of the Act, in view of the divergence of judicial opinion between the Karnataka and Gujarat High courts on the question. (5) DR Gourishankar, learned Sr. Adv. for the revenue, sub mitted that S. 64(1(i) of the Act, which corresponded to Section 16(3(a)(i) of the 1922 Act, clearly envisaged an artificial liability and that though the expression "income" might, in certain circumstances, include "negative income" also, however, such a construction was excluded by the manifest intention in S. 64(1(i). The two expressions "income" and "shall be included" in S. 64(1, it was urged. clearly excluded any concept of such "negative income" as the idea was clearly one of adding rather than one of subtracting or set-off. Dr Gourishankar said that the provision was intended to curb a tendency on the part of the tax payer to endeavour to avoid or reduce liability to tax by distributing the sources of income to the spouse so that the income could not, in law, be said to be received by him, he would yet retain certain power over the source - and the income itself. But, he urged, where the statutory language was plain and unambiguous there would arise no need to resort to any process of interpretation so as to give the statutory language a meaning to accord with its supposed intention. The plain meaning of a provision, it was said, must be given effect lo. whatever the inequity or hardship that might be thought to result from its enforcement, as long as the meaning of the provision was plain and unambiguous. (6) S. 64(1(i) is analogous to S. 16(3(a)(i) of 1922 Act. The plain meaning of a provision, it was said, must be given effect lo. whatever the inequity or hardship that might be thought to result from its enforcement, as long as the meaning of the provision was plain and unambiguous. (6) S. 64(1(i) is analogous to S. 16(3(a)(i) of 1922 Act. Section 16(3 of the 1922 Act was introduced by the Amending Act 4 of 1937, before which there was no provision at all for inclusion of the income of the wife in the total income of any individual. Apart from genuine cases where the sources of income of the wife or the minor child were independent of the sources acquired from the father, cases of avoidance of tax by the device of creating partnerships with wives and minor children, as partners or persons admitted to the benefits of partnerships respectively presented serious problems and were considered in the Income Tax Enquiry Report, 1936, which envisaged as "obvious remedy" so far this state of affairs of husband and wife is concerned, the aggregation of their incomes for assessment. However, the report recognised that such a course would involve the aggregation in a quite different class of cases i.e. where the wifeS income arose from sources unconnected with the husband. The report, therefore, said : "We recommend, therefore, that the incomes of a wife should be deemed to be, for income tax purposes, the income of her husband, but that where the income of the wife is derived from her personal exertions and is unconnected with any business of her husband, the income from her personal exertions up to a certain limit, say Rs. 500.00, should not be included". However, S. 16(3 introduced by the Amending Act 4 of 1937 adopted a slightly different legislative expedient. (7) IN COMMISSIONER OF INCOME TAX v. Manilal Dhanji this court referring to the object of Section 16(3 of 1922 Act said: ".... Then we come to Ss. (3. This Ss. aims at foiling an individualS attempt to avoid or reduce the incidence of tax by transferring his assets to his wife or minor child or admitting his wife as a partner or admitting his minor child to the benefits of a partnership in a firm in which such individual is a partner. THE Ss. creates an artificial liability to tax and must he strictly construed. THE Ss. creates an artificial liability to tax and must he strictly construed. " (emphasis supplied) (8) THOUGH the question referred, as formulated, refers to the carry forward of the share of loss of the wife. the preceding sequential, and indeed the core, proposition is whether S. 64(1(i), which speaks of the includibility of the income of a spouse from the membership of the spouse in a firm in which the assessee is a partner would also permit the share of the loss of the spouse to bet set off against or accumulated with the income or the loss, as the case may be, of the husband and if the result in the hands of the husband is an unabsorbed loss, whether it could be carried forward if the other conditions for the set off are satisfied. In the present case, the question of such carry forward to the loss arose in view of the fact that the assessee had also sustained a loss. The basic question is whether the expression "income" in S. 64(1 includes loss also. (9) THREE considerations are relevant in answering the question. First is the effect of the Circular No. 20 of 1944 of the central Board of Revenue as to its understanding of analogous provision in Section 16(3(a) of 1922 Act. The relevant part of that circular says: " ... The Board has reconsidered the question and has decided that, although this view may be tenable i in law, the other and more equitable view is at least equally tenable that such loss should he treated as if it were a loss sustained by that individual. Thus if the wife or minor child has a personal income of Rs. 5,000.00 which is not includible in the individualS income and sustains a loss of Rs. 10,000.00 from a source the income of which would be includible in the income of the individual, the loss should be set off against the income of the individual under S. 24(1, and if not wholly set off should be carried forward under S. 24(2 ...." (10) THE second is Explanation 2 added to S. 64 by the Finance Act, 1979, w.e.f. 1/04/1980. That Explanation says that : "For the purpose of this section, income includes loss." (11) THE third consideration is the decision of this court in COMMISSIONER OF INCOME TAX v. J.H. Gotla dealing with Section 16(3 of 1922 Act, which has examined and evaluated the first two interpretation criteria. It appears to us that the answer to the question referred to is covered by the pronouncement in Gotla case and must needs be in the affirmative and against the revenue. (12) IN Gotla case this court said "... Therefore, where S. 16(3 of the Act operates, the profits or loss from a business of the wife or minor child included in the total income of the assessee should be treated as the profit or loss from a "business carried on by him" for the purpose of carry forward and set off such loss under S. 24(2 of the Act. ON a consideration of the scheme of the Act and the provisions therein as noted before, the share income of the wife and minor children included in the assesseeS total income under S. 16(3 of the Act should be regarded as business income derived from business carried on by the assessee and in that view of the matter, the assessee is entitled to set off his loss carried forward from the previous years." (13) THE provisions dealt with in Gotla case were, of course, the corresponding provisions of the 1922 Act. But the provisions of Section 16(1(i) are substantially the same and the exposition of the law under the relevant provisions of the 1922 Act must be held to govern the corresponding position under 1961 Act as well. The Explanation 2 inserted in S. 64 with effect from 1/04/1980 though not retrospective in its operation serves as the legislative exposition of the import of Section 64(1(i). The Madhya Pradesh High court in COMMISSIONER OF INCOME TAX v. Badri Prasad Agarwal considered the effect of this legislative exposition and the learned Chief Justice speaking for the division bench of the High court said : "SPEAKING generally, subsequent legislation cannot be used for construction of an earlier statue but if an enactment is really ambiguous, subsequent legislation can be used as a parliamentary exposition of the former. (See Craies on Statute Law, 7th edn. pp. (See Craies on Statute Law, 7th edn. pp. 147-48 This principle was recently applied by the Supreme court in construing S. 15(b) of the central Sales Tax Act, as it stood before its amendment by Act 61 of 1972, and the amendment introduced by this Amending Act, though not retrospective was used as a parliamentary exposition of its intent contained in the unamended section. (See Manickam & Co. v. State of Tamil Nadu.) The Explanation added in S. 64 by the Finance Act, 1979, though not in terms retrospective serves as a parliamentary exposition of the meaning of the word income as used in the unamended section, for, that word, in the context of S. 64, was really ambiguous and had given rise to diverse meaning." (14) THIS view of the Madhya Pradesh High court has been referred to with approval by this court in Gotla case. (15) THIS construction of the provision also commended itself to the Direct Tax Law Committee 1978 which in final report said: "THE provisions for aggregating income of the spouse under clause (i) of S. 64(1 has led to a dispute in regard to the treatment of losses which may fall to the share of the spouse from the partnership. The Gujarat High court in Dayalbhai Vadera v. COMMISSIONER OF INCOME TAX has ruled that the S. contemplates inclusion of income and, accordingly, the share of loss arising to the spouse cannot be set off against the total income of the other spouse. The Karnataka High Court in Kapadia v. COMMISSIONER OF INCOME TAX has dissented from this view and has held that income in this S. includes a loss. On general principles, income from membership in afirm would include a loss and the context of clause (i) of Ss. (1 does not warrant the contrary construction. The liability to assessment cannot alternate from year to year between the individual and the spouse depending on whether there is a profit or a loss ...." (emphasis supplied) (16) WE are in respectful agreement with the view taken in Gotla case and are not persuaded to take a different view which the acceptance of the submissions of Dr Gourishankar would require. Accordingly, we answer the question referred in the affirmative and against the revenue.