PARASRAM JETHANAND Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE three reference under section 66(I) of the Indian Income-tax Act raise for consideration a common question of law regarding the proper interpretation, among others, of section 14(2)(c) and the first proviso to section 24(I) of the Income-tax Act.

(2.) THE admitted facts in regard to the above cases are those : Referred Case No. 47 of 1951 relates to the assessment of one Parasram Jethanand, a merchant carrying on business in paper at Madras and Bangalore. THE reference is concerned with the assessment years 1945-47 and 1947-48. THE Madras business yielded a profit in the two years named above of Rs. 17,340 and Rs. 55,621 respectively, while the assessee sustained a loss in the branch business at Bangalore of Rs. 6,408 and Rs. 14,603, in the two respective years. THE assessee claimed that for the computation of the total income on which he could be taxed the loss sustained by him in his business in paper at Bangalore shout be taken into account and it was only the resultant figure that could be deemed to be his assessable profit for the respective years. THE Income-tax Officer negatived this claim on the ground that the loss incurred by him in the Bangalore branch could not be set off on the ground that it was forbidden by reason of the first proviso to section 24(I0 of the Income-tax Act. THE Appellate Assistant Commissioner on appeal however allowed the assessees basing himself on the decision of the Bombay High Court in Commissioner of Income-tax v. Murlidhar Mathurawalla Mahajan Association. THE Department filed on appeal to the Tribunal and this appeal was allowed, the Tribunal relying on a decision to the contrary effect by the Allahabad High Court in Mishrimal Gulabchand of Beawar v. RE. On these facts, the assessee applied under section 66(I) for the reference of the following question of law to this Court and this question has been referred to us for determination :

(3.) WE shall be referring to the first proviso under section 24(I) whose interpretation and legal effect are raised by these reference a little later.