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Interpretation of Section 24 of the Income-tax Act regarding setting off losses against income from different sources. Analysis: The case involved questions regarding the income arising to the assessee as a share in an association of persons separately assessed to tax and the set off of the assessee's share in the income of the association against brought-forward losses. The assessee, a Hindu undivided family, incurred a loss in its own business in the previous year, which was set off against the income from the association of persons. The dispute arose in the assessment for the year 1942-43, where the department set off the unabsorbed loss against the total income of the assessee from its family business and the association. The interpretation of Section 24 of the Income-tax Act was crucial in determining the validity of this set off. The court analyzed the provisions of Section 24 of the Income-tax Act, which allows for the set off of losses against income under different heads. It was noted that if an assessee sustains a loss under any head mentioned in Section 6, they are entitled to set off the loss against income under any other head in that year. The court emphasized that the nature of the income, whether taxed previously or not, is irrelevant to determining if it qualifies as income. The key consideration is whether the receipt is a regularly recurring revenue receipt, making it income regardless of previous taxation. Regarding the specific case, the court highlighted the distinction between sub-sections (1) and (2) of Section 24. Sub-section (1) deals with setting off losses against income in the same year, while sub-section (2) pertains to carrying forward losses to subsequent years. The court ruled that once sub-section (1) has been used for a particular year's loss, the surplus of that loss should be carried forward and set off in subsequent assessments. In this case, the unabsorbed loss should have been set off against the income of the same business where the loss occurred, not against a different business. The court concluded that the business in which the loss was suffered by the assessee was not the same as the business of the association of persons. Therefore, the unabsorbed loss could only be set off against the income of the business where the loss occurred, not against the income from the association. The court answered the first question in the affirmative and the second in the negative, ruling in favor of the assessee and awarding costs against the department.
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