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TMI Blog1965 (4) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... d income of ₹ 23,302 can be set off under section 24(2) against the business loss of ₹ 4,17,255 (Rs. 12,934 Plus ₹ 4,04,321) brought forward from the assessment year 1955-56?" The material facts as appearing from the case stated by the Tribunal are these. The relevant assessment years are 1955-56 and 1956-57, the corresponding account years being 7th November, 1953, to 26th October, 1954 and 27th October, 1954, to 14th November, 1955. The assessee is a Hindu undivided family deriving income from several sources falling under the following three heads: (i) Income from property (section 9); (ii) Profits and gains of business, profession or vocation (section 10); and (iii) Income under the residuary head which now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the assessment year 1956-57 because, though there was a profit of ₹ 3,56,553 under the business head, the loss of well over ₹ 4,00,000 which had been brought forward was larger than the profit. There was also the dividend income of ₹ 23,302. Therefore, it was really in that year that the question of set-off under section 24(2) of the Act arose. For each of the two assessment years, the Income-tax Officer and the Appellate Assistant Commissioner took the view that the profits and gains, if any, of any business, profession or vocation mentioned in section 24(2)(ii) meant only those profits and gains which were assessed under section 10. When those cases went to the Tribunal, it took a different view and allowed the set- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar; (ii) Where the loss was sustained by him in any other business, profession or vocation, it shall be set off against the profits and gains, if any, of any business, profession or vocation carried on by him in that year: provided that the business, profession or vocation in which the loss was originally sustained continued to be carried on by him in that year; and (iii) if the loss in either case cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following year and so on, but no loss shall be so carried forward for more than eight years...." The precise question which we have to consider is whether dividend income derived from shares held, as in this case, as stock-in-trade should be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .'s case [1957] 32 I.T.R. 688, 704 (S.C.) that business income is broken up under different heads only for the purpose of computation of the total income: by that break up the income does not cease to be the income of the business, the different heads of income being only the classification prescribed by the Indian Income-tax Act for computation of income." In United Commercial Bank Ltd. v. Commissioner of Income-tax [1957] 32 I.T.R. 688, 704 (S.C.), the question was whether, when the purchase and sale of securities formed part of the assessee's business, interest on such securities falling under section 8 could be set off under section 24(2) of the Act. The Supreme Court remanded the case and observed as follows: "He a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l would, therefore, be allowed and the case remitted to the High Court for a fresh decision of the reference after getting from the Tribunal a fuller statement of facts about this part of the case, whether the securities in question were a part of the trading assets held by the assessee in the course of its business as a banker." In Cocanada Radhaswami Bank Ltd. v. Commissioner of Income-tax [1962] 46 I.T.R. 680, Satyanarayana Raju J. opined in a very brief judgment, that interest on securities held by a bank as part of its trading assets can be set off under section 24(2) against business losses of earlier years which had been carried forward. It appears that the learned judge took into consideration the fact that, in the case of Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gains assessable under section 10 of the Act. Shah J., speaking for the court, further observed: "It has also to be noticed that prior to the insertion of sub-section (1A) of section 12 by section 9 of the Finance Act, 1955, with effect from April 1, 1955, income from dividends was chargeable not under section 12 but under section 10, if the shares from which such income was received were the stock-in-trade of the assessee. The result of the insertion of section 12(1A) is that in respect of business in shares dividends received from the shares were till March 31, 1955, regarded as profits and gains of business assessable to tax under section 10. After the enactment of the Finance Act of 1955, dividends became chargeable under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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