TMI Blog1970 (12) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ess in timber as well as in processing cashewnuts and coffee seeds. His timber business was largely export business whereas cashew business appears to be largely internal business. He suffered a loss of Rs. 1,04,417 as far as the cashew business is concerned as computed by the assessing authority whereas in the timber business there was a profit to the extent of Rs. 2,01,107 as computed by the assessing authority. The assessee has kept separate accounts in relation to his cashew and coffee business. The sum of Rs. 96,690 mentioned in the question referred to us is the difference between the sum of Rs. 2,01,107 (profits and gains of timber business) and the sum of Rs. 1,04,417 (loss in relation to the cashew and coffee business). The quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) of sub-section (5) of section 2 of the Finance (No. 2) Act, 1962 (XX of 1962), carries on any business of exporting goods or merchandise out of India, the amount of the profits and gains of such business with reference to which deduction of tax is admissible under that sub-section (hereinafter referred to as the 'qualifying income ') shall be computed in accordance with the provisions of sub-rule (2), or sub-rule (3), or sub-rule (4) of this rule, as the case may be. (2) Where in the opinion of the Income-tax Officer it is possible to ascertain the profits and gains on such exports, the amount of qualifying income shall be taken as the excess of the amount of the profits and gains so ascertained in accordance with the provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew that sub-rule (3) of rule 2 of the Rules can only refer to the income from the timber business in the case of the assessee before us as he was treating his timber business as separate from other business in cashew and coffee. We are unable to agree with these views expressed by the Income-tax Appellate Tribunal. The total income must refer to what has been defined in section 2(7) of the Act. Section 2(7) of the Act is in these terms : " 2. (7) For the purpose of this section, and of the rates of tax imposed thereby .... (ii) The expression 'total income' means total income as determined for the purposes of income-tax or super-tax, as the case may be, in accordance with the provisions of the said Act ...." We may in this connection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been granted under any provision of the Act " must refer to the income which is included in the total income as envisaged by section 66 of the Income-tax Act, 1961, but on which no income-tax or super-tax is payable and in relation to which deductions were permitted under section 110 of the same Act, as well as under any other provisions of the Income-tax Act, 1961. It is clear from these provisions in the Income-tax Act and particularly from the expression " total income " used in sub-rule (3) of rule 2 of the Rules that the total income must be the total income as computed under the provisions of the Income-tax Act. Such income will be only Rs. 96,690, as section 70 of the Income-tax Act permits set off of loss from any other source u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me as computed under the provisions of the Income-tax Act, 1961, as envisaged by sections 2(45) and 66, there can be no doubt at all that the qualifying income must be Rs. 96,690. Further deductions, if necessary, will have to be made on this amount as envisaged by sub-rule (3) of rule 2 of the Rules. But this part of the case is unimportant because, apparently, there is no further deduction to be made and the question referred to us only poses as alternatives as to whether it should be Rs. 2,01,107 or Rs. 96,690. We are of the view that it must be Rs. 96,690. We, therefore, answer the question referred to us by stating that the deduction permissible under section 2(5) of the Act must be calculated on the sum of Rs. 96,690 which will be the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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