TMI Blog1965 (4) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... he Cocanada Bank Ltd., Kakinada, hereinafter called the assessee, is a private limited company carrying on banking business with its head office at Kakinada and a branch at Dayal Bagh. The assessee's sources of income are banking business and interest from government securities. For the assessment year 1949-50 its income was assessed as follows : Rs. Interest on securities .. 8,488 Other banking activities .. 64,400 (loss) Net loss .. 55,912 The following tabular form shows at a glance the factual position in regard to the income of the assessee under different heads during the said three years : --------------------------------------------------------------------------------------------------------------------------------------------------- Business income or Year Interest loss (as of on finally Total assessment securities decided by the A.A.C.) (1) (2) (3) (4) --------------------------------------------------------------------------------------------------------------------------------------------------- Rs. Rs. Rs. 1. 1950-51 5,191 886 6,077 2. 1951-52 2,174 1,177 3,351 3. 1952-53 1,885 9,121 11,006 ----------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income from securities and the income from business were calculated separately, in a case where the securities were part of the trading assets of the business, the income therefrom was part of the income of the business and, therefore, the losses incurred under the head " Business " could be set off during the succeeding years against the total income of the business, i.e., income from the business including the income from the securities. The relevant section of the Act which deals with the matter of set-off of losses in computing the aggregate income is section 24. The relevant part of it, before the Finance Act, 1955, read : " 24. (1) 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..... (2) Where any assessee sustains a loss of profits or gains in any year, being a previous year not earlier than the previous year for the assessment for the year ending on the 31st day of March, 1940, in any business, profession or vocation, and the loss cannot be wholly set-off under sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was the income of the business, section 24(2) of the Act was immediately attracted. If the income from the securities was the income from its business, the loss could, in terms of that section, be set off against that income. A comparative study of sub-sections (1) and (2) of section 24 yields the same result. While in sub-section (1) the expression " head " is used, in sub-section (2) the said expression is conspicuously omitted. This designed distinction brings out the intention of the legislature. The Act provides for the setting off of loss against profits in four ways. To illustrate, take the head " profits and gains of business, profession or vocation ". An assessee may have two businesses. In ascertaining the income in each of the two businesses, he is entitled to deduct the losses incurred in respect of each of the said businesses. So calculated, if he has loss in one business and profit in the other both falling under the same head, he can set off the loss in one against the profit in the other in arriving at the income under that head. Even so, he may still sustain loss under the same head. He can then set off the loss under the head " business " against profits under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot say that the income from securities is not income from the business. Nor does the decision of this court in East India Housing and Land Development Trust Ltd. v. Commissioner of Income-tax support the contention of the revenue. There, a company, which was incorporated with the objects of buying and developing landed properties and promoting and developing markets, purchased 10 bighas of land in the town of Calcutta and set up a market therein. The question was whether the income realised from the tenants of the shops and stalls was liable to be taxed as " business income " under section 10 of the Income-tax Act or as income from property under section 9 thereof. This court held that the said income fell under the specific head mentioned in section 9 of the Act. This case also does not lay down that the income from the shops is not the income in the business. In Commissioner of Income-tax v. Express Newspapers Ltd. this court held that both section 26(2) and the proviso thereto dealt only with profits and gains of a business, profession or vocation and they did not provide for the assessment of income under any other head, e.g., capital gains. The reason for that conclusion is st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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