TMI Blog1968 (8) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso to section 24(1) of the Income-tax Act, 1922. The facts in C.A. No. 1761 of 1967, in which the question in the above form was referred, the language of the question being somewhat different in the other appeal, may be stated. The assessee, who is an individual, derived income from three sources, i.e., property, shares in joint stock companies and commission agency business and shares in partnership firms. The accounting year relevant to the assessment year 1953-54 was the period from October 20, 1951, to October 8, 1952. In the personal business of commission agency, the assessee returned a net profit of ₹ 2,761. In arriving at this figure the net share of loss of ₹ 11,075 from the firm of Kamta Prasad Raghunath Prasad, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number. Section 7 deals with the first head salaries , section 8 with the second head interest on securities , section 9 with income from property and section 10 provides for liability to tax under the head profits and gains of business, profession or vocation , which is the fourth head given in section 6. It is unnecessary to go to the fifth and sixth heads. Section 24 provides that where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in section 6, he shall be entitled to have the amount of the loss set off against his income, profits or gains under any other head in that year. In the year with which we are concerned in the present case there was a proviso which was, at that time, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 24(1) and, therefore, the proviso had no application. The argument was elaborated further by referring to the true nature and function of a proviso which was to except or take out a particular portion from the field dealt with by the section. Chagla C.J., who delivered the judgment of the Bombay Bench, had no difficulty in coming to the conclusion that, on the language of the proviso itself and on the scheme of the Act, the legislature, in enacting the so-called proviso, was enacting a substantive provision dealing with the mode of computing the profits and gains chargeable under the head profits and gains of business, profession or vocation and that the legislature had provided that when profits and gains were computed the loss sust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Income-tax v. Kantilal Nathuchand: Section 24 is, thus, a provision laying down the manner of computation of total income. The principal clause of section 24(1) lays down that, if there be a loss of profits or gains in any year under any of the heads mentioned in section 6, that loss has to be set off against the income, profits or gains of the assessee under any other head in that year. If this provision had stood by itself without any provisos, the result would have been that all losses incurred by an assessee under any of the heads mentioned in section 6 would be adjusted against profits under all other heads, and then the total income of the assessee would be worked out on that basis. The first proviso to this sub-section, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n kappas. The learned counsel for the assessee sought to press the reasons which prevailed with the learned judges of the High Court and has sought to characterise the above observation as obiter. It is neither necessary to deal with the reasoning of the High Court nor can that reasoning stand in view of what has been laid down in Kantilal Nathuchand's case by this court which cannot be regarded as obiter because it has been clearly stated that the question of the applicability of the proviso with which we are concerned arose directly in that case in respect of the assessment years 1958-59 and 1959-60. The concluding portion of the passage extracted leaves no room for doubt in this matter. Moreover we are of the opinion that, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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