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TMI Blog1986 (9) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of provisional figures of its business loss including depreciation and its income from dividends. On the basis of those provisional figures, it was assessed to a net loss of Rs. 31,33,647. As its Indian income exceeded its income outside India, it was assessed as a resident. Meanwhile, on March 28, 1957 the appellant had already been assessed for the subsequent assessment year 1956-57 in the status of non-resident, and its income of Rs. 53,11,958 from dividends was assessed under the head " Income from other sources ". It is obvious that the loss determined for the assessment year 1955-56 could not be carried forward and set off against the income for the assessment year 1956-57, as the latter assessment was made subsequent to the former. On February 12, 1958, the appellant preferred two revision applications, one each for the assessment years 1955-56 and 1956-57, before the Commissioner of Income-tax under sub-section (2) of section 33A of the Indian Income-tax Act, 1922. In the revision application for the assessment year 1955-56, the appellant claimed that the quantum of loss determined for that year having been based on provisional figures should now be revised o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal rejected the application on December 1, 1966. On December 5, 1966, the Commissioner of Income-tax disposed of the revision applications filed by the appellant. The revision application pertaining to the assessment year 1955-56 was allowed subject to the claim being verified in regard to the figures and calculation of depreciation by the Income-tax Officer. The revision application pertaining to the assessment year 1956-57, however, was rejected with the observation that the dividend earned by the appellant from investments in shares of companies carrying on tea business could not be said to be a part of the appellant's business because the investments were not incidental to the appellant's business activities and were not held as trading assets. It was also stated that the companies from which the dividend was earned were not companies of which the appellant was the managing agent so as to require the making of such investments for the purposes of its business as managing agents. The Commissioner also rejected the contention of the appellant that a set off should be allowed to the extent of the unabsorbed depreciation brought forward from the assessment year 1955-56 agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 1956-57. There was considerable debate on the question whether the dividend income received by the appellant from its shareholdings in different companies engaged in tea business could be regarded as business income. It is a cardinal principle of the law relating to income-tax that income-tax is a single charge on the total income of an assessee. For the purpose of computation, the statute recognises different classes of income which it classifies under different heads of income. For each head of income, the statute has provided the mode of computing the quantum of such income. The mode of computation varies with the nature of the class of such income, for the deductions permissible under the law in computing the income under each head bear a particular relevance to the nature of the income. The statute operates on the principle that it is the net income under each head which should be considered as a component of the total income. The statute permits specified deductions from gross receipts in order to compute the net income. The net income under the different heads is then pooled together to constitute the total income. The process of computation at this stage takes in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curities is separately classified, income by way of interest from securities does not cease to be part of the income from business if the securities are part of the trading assets. Whether a particular income is part of the income from a business falls to be decided not on the basis of the provisions of section 6 but on commercial principles ... If it was the income of the business, section 24(2) of the Act was immediately attracted. If the income from the securities was the income, from its business, the loss could, in terms of that section, be set off against that income." Accordingly, the mere circumstance that the appellant showed the dividend income under the head " Income from other sources " in its returns cannot in law decide the nature of the dividend income. It must be determined from the evidence whether having regard to the true nature and character of the income, it could be described as income from business, even though it is liable to fall for computation under another head. This principle was again applied in 0. RM. M/1. SP. SV. Firm v. CIT [1967] 63 ITR 404 (SC). The position on the law is clear. But is the appellant in the present case entitled to the relief clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore us that the Revenue can be said to have admitted that the dividend income received by the appellant from its shareholdings in other companies can be regarded as part of the appellant's income from business. Consequently, we are unable to sustain the appellant's challenge to the view expressed by the Division Bench of the High Court in regard to the appellant's claim that the dividend income must be regarded as income from business. The next point raised by the appellant is that the loss should be carried forward under sub-section (2) of section 24 from the assessment year 1955-56 to the assessment year 1956-57 and it is not necessary that the business carried on in the assessment year 1956-57 should be the same as that carried on in the assessment year 1955-56. This point must also fail because it proceeds on the assumption that the shares held by the appellant can be regarded as its trading assets. The final contention of the appellant relates to the carry forward of unabsorbed depreciation under sub-section (2) of section 10. The Division Bench appeared to be of the tentative view that the appellant was entitled to the carry forward claimed by it, but it did not express a ..... 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