(1.) THE common question arising out of the assessments of the assessee for the assessment years 1977-78 and 1978-79 and referred to us for our decision is, as to whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the business loss incurred in Malaysia by the assessee for the accounting year 1976-77, when he was a citizen of India having business income in India and also in Malaysia, can be set off against the business income earned in India for the assessment year 1978-79 when he became a nonresident.
(2.) THE assessee was a resident of India in the year 1976-77 and the computation of his income from the business that he carried on in Malaysia showed a net loss. That loss was allowed to be carried forward to the subsequent assessment year, as the income earned from Indian business in that year was insufficient to set off that loss from the Malaysian business against the profits of the Indian business. THE amount so allowed to be carried forward was a sum of Rs. 28,699. THE assessee became a nonresident during the assessment year 1977-78.
(3.) COUNSEL also relied on the decision of the Supreme Court in the case of Indore Malwa United Mills Ltd. v. CIT [1962] 45 ITR 210, wherein, it was held that, the reference to profits or gains in Section 24(1) of the Indian Income-tax Act, 1922, refers to taxable profits or taxable gains, and it has no reference to income accruing or arising without British India, or with out the taxable territories, which were not liable to be assessed in the case of non-residents and the loss claimed could not be carried forward and set off. It was further held that for determining the nature of the losses in question in that case for the, relevant year being 1948-49, the year in which the losses occurred, the fact that during the two assessment years 1950-51 and 1951-52, Indore was part of India could not give the assessee a right to set off under Section 24(2) of the Act.