COMMISSIONER OF INCOME TAX Vs. HUKAM CHAND DALAL

JUDGEMENT

(1.) THE question referred to us in this reference under section 66 (1) of the Income-tax Act is whether on the facts and in the circumstances of this case, for the purpose of computing the assessees income, profits and gains under section 10 of the Indian Income-tax Act the loss sustained by him in jobbing transactions was not adjustable against the profits from the brokerage activities of same period by reason of the terms of the first proviso (as inserted by the Finance Act, 1953) to sub-section (1) of section 24 of the Act.

(2.) IN the present case the INcome-tax Officer and the Appellate Assistant Commissioner have held that this proviso was bar to setting off the losses incurred by the assessee in his speculative business against the profits realised by him from his brokerage business. The Appellate Tribunal, however, held that the proviso to section 24 (1) did not in any way control section 10 of the Act. The learned judicial member of the Tribunal cited in this connection a passage from the judgment of the Bombay High Court in Commissioner of INcome-tax v. Murlidhar Mathurawalla Mahajan Association to the effect that all businesses wherever carried on constitute one head which falls under section 10 and in order to determine what are the profits and gains of a business under section 10, an assessee is entitled to show all his profits and set off against those profits losses incurred by him in the same head and it is only when he proceeds to set off a loss under business against a profit under some other head that section 24 comes into operation and various considerations will arise whether he is entitled to such a set-off or not.