TMI Blog1985 (4) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... s or profession' had allowed set off of carried forward loss, which had arisen to the assessee outside India, for the assessment year 1976-77 and which could not be fully absorbed in 1977-78. Since the Commissioner was of the view that as a non-resident is not taxable on any income which has arisen outside India, he came to the conclusion that the set off of loss that had arisen to the assessee outside India in an earlier year in the assessment made for the assessment year 1978-79 by the ITO was not in order. Accordingly, he resorted to proceedings under section 263 of the Income-tax Act, 1961 ('the Act') and eventually, set aside the assessment for the assessment year 1978-79 with a direction to the ITO to redo the assessment in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is permitted the Income-tax Officer has no choice but to adjust it against the income if any of the subsequent years as section 72 contains no provision prohibiting the set off of the loss against the Indian income. Where the words of a statute are neutral in import, the construction beneficial to the assessee has to be given. In the absence of any patent prohibition against the set off, the appellant is entitled to a set off. In the result, the appeal is allowed. " 4. As against this order, the department is in appeal before us. Before us, the learned departmental representative submitted that the Commissioner (Appeals) is not correct in allowing the assessee's claim for the carry forward and set off of loss relating to the earlier ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with the provisions of section 5. The department was of the view that since the assessee is a non-resident for 1978-79, the foreign income/loss should not be taken into account. The case of the assessee was that as per section 72 of the Act, once the loss is determined under the head 'Profits and gains of business or profession' the same is a consolidated loss to the assessee and there is no distinction drawn of Indian loss or foreign loss under section 72. As per section 72(1), according to the assessee, such loss shall be set off against the profits and gains of any business assessable for that assessment year. Another submission of the assessee was that when section 72 was silent with regard to the residential status of the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of textile goods. Its mills were situated in Indore, an Indian State, and sales were made in various places in India within and outside the taxable territories. Up to the assessment year 1949-50, the assessee was treated as a non-resident. In the next two assessment years, Indore became part of the taxable territories and the assessee claimed in the assessment proceedings for 1950-51 that it was entitled to carry forward and set off of the loss of the assessment year 1948-49, against the assessee's business income for the assessment years 1950-51 and 1951-52. On these facts, the Supreme Court, affirming the decision of the High Court, held as under : " ...that reading the provisions of section 24 with the provisions of section 4(1)(a) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble and the loss could not be carried forward and set off in the assessment for the year 1950-51 and the subsequent years. " 9. In both the aforesaid cases, the assessee had not acquired the right of carry forward of loss under the 1922 Act in the earlier assessment year and, therefore, the second stage of set off of carried forward loss had not been reached. Here, however, the converse is the position. The assessee in the assessment year 1976-77 had acquired the right of carry forward and set off of loss of Rs. 19,967. The question is : can that right be nullified in the assessment year 1978-79 ? It is settled law that in the assessment year 1978-79, it can again be examined whether the computation of loss in 1976-77 was in order. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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