TMI Blog1952 (12) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing question was referred to the High Court of Madras by the Income-tax Appellate Tribunal under Section 66(1) of the Indian Income-tax Act, 1922 :--- " Whether on the facts and in the circumstances of the case when an assessment has been made under Section 23(1) of the Indian Income-tax Act, determining the assessee company's income as ' nil ' and when proceedings under Section 34 were subsequently started to assess the income which the Income-tax Officer believed to have escaped assessment the assessee company is entitled to claim that the loss of profits and gains (including depreciation allowance) sustained by it in the previous year should be determined in the course of such proceedings." We are concerned in this case with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usual printed form in which returns are normally made but the only entry in the whole form is the word " nil ". The following declaration was also added :--- " I further declare that the company was not resident in British India during the previous year etc ......" On 25th March, 1942, the Income-tax Officer made the following order which he called an Assessment Order :--- "The company made a nil return of income obviously for the reason that it is not carrying on any business in British India ... I accept the return of income filed by the company and declare it is not liable to tax for the year 1941-42." A year later, namely on 9th March, 1943, the Income-tax Officer sent the assessee a notice under Section 34(1)(b) in the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to record it and carry it forward. Appeals followed to the Appellate Assistant Commissioner of Income-tax and the Income-tax Appellate Tribunal and ultimately there was a reference to the High Court. The assessee has failed throughout and now appeals here. The assessee's contention is based on the following provision of Section 34. The first sub-section states that when a notice is issued under that section the Income-tax Officer may proceed to assess or reassess such income, profits or gains or recompute the loss or depreciation allowance and that "the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under sub-section (2) of Section 22." This it is said attracts Section 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e done sub-section does not come into play. Next, a set-off under Section 24(1) can only be claimed when the loss arises under one head and the profit against which it is sought be set off arises under a different head. When the two arise under the same head, of course the loss can be deducted but that is done under Section 10 and not under Section 24(1). See the decision of the Privy Council in Rm. Ar. Ar. Rm. Arunachalam Chettiar v. Commissioner Income-tax, Madras. In the present case, the loss is computed striking a balance in the profit and loss account of just the one business and consequently no question of different heads arises. On both the grounds, therefore, the assessee's contention must fail because, unless the loss can be se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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