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Interpretation of Section 24(1) of the Indian Income Tax Act, XI of 1922 regarding the treatment of losses from debenture investments for set off against income. Analysis: The case involved a reference under Section 66(2) of the Income Tax Act regarding a loss of Rs. 8,58,710 incurred by the assessee on debentures issued by a company that went into liquidation. The assessee sought to set off this loss against his income from other sources for the financial year 1933-34. The key question was whether this loss could be considered as "a loss of profits or gains" under any heads of income in Section 6 of the Act for set off purposes. The judgment delivered by Sir W. Beaumont, C.J., and Rangnekar, J., focused on the interpretation of Section 24(1) of the Act. It was noted that for a loss to be set off against income, it must be incurred under one of the heads mentioned in Section 6. In this case, the loss arose from an investment in debentures, falling under the head "Interest on Securities." The Income Tax Officer found that the loss was a capital loss, not a loss of profits or gains, and disallowed the set off. The judges emphasized that the debentures were not part of the assessee's money-lending business, as they were investments made by the assessee's mother when he was a minor. The court held that the loss on such investments is a loss of capital and cannot be set off against profits or gains. The judges concluded that no legal question arose, and the assessee was not entitled to set off the loss under any provision of the Income Tax Act. In conclusion, the High Court ruled that the loss incurred on debentures could not be set off against the assessee's income for the financial year 1933-34. The judgment highlighted the distinction between capital losses and losses of profits or gains under the Income Tax Act, ultimately denying the assessee's claim for set off. The decision was unanimous, with Rangnekar, J., concurring with the opinion of Sir W. Beaumont, C.J.
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