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TMI Blog1929 (2) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... February 1926. It was therefore on 26th February 1926, that the assessee, B. Shiva Prasad Gupta, at whose instance this reference has been made, became the owner of the lot given him as the result of the partition. 26th February 1926 was almost at the close of the Samvat year 1982. The Samvat year 1983 began on 15th March 1926. For the Samvat 1983 B. Shiva Prasad Gupta had a statement of his financial position drawn up in the shape of a profit and loss account. I have already mentioned that the family became separate with effect from 9th October 1921 which would correspond to sometime about Katik 1978 Samvat. In preparing the profit and loss account on the credit or income side was shown the interest which accrued to B. Shiva Prasad during the years 1978 to 1983 Samvat, each year being shown separately. On the debit or loss side was shown for different years, such amounts as represented either a loss in business or unrealizable debts. 3. B. Shiva Prasad Gupta was to be assessed for his income of the years 1927-1928. The amount of his probable income for the purpose of assessment was to be taken to have been the same as was his actual income in the previous year," namely 1926- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gupta that he is entitled to deduction out of what has been taken to be his income. The learned Government Advocate has contended that the High Court has no power to find out for itself what are the substantial questions of law that have arisen between the parties and that it is bound either to answer such questions as have been put to it by the Commissioner of Income-tax or send back the case to him to make a fresh "statement" in the case. 6. In view of this contention, I have considered Section 66, Income-tax Act, carefully. I am unable to find any warrant in it for the extreme contention of the learned Government Advocate. It appears to me that the section is not happily worded and the pronoun "it" has been used sometimes for a "question of law" and sometimes for the "case" The meaning and object, however, of the entire Section 66 seems to me to be free from obscurity. My impression is that the High Court has to accept the facts as found by the Commissioner of Income-tax and if necessary may call for more facts by asking him to make a fresh statement of them under Sub-section 4, Section 66. But it is for the High Court to find out from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s decision. In this subsection what is to be referred to the High Court is the statement of the case or the case itself and not a point or points of law. 11. Sub-rule 4 relates to the affair when statement of the case made by the Commissioner is unsatisfactory. It says that where a statement in a case referred under this section (Section 66) is insufficient to enable the High Court to determine the question raised "thereby," namely by the case, the Court may refer back the case to the Commissioner for additions and alterations. This proviso supports the view that it would be for the High Court to find out what is the real point of law that is in issue between the assessee on the one hand and the income-tax authorities on the other and whether for the purposes of determination of the point of law, sufficient facts have been supplied. It must be remembered that the questions of law that would ordinarily arise would arise in connexion with particular facts and must be answered with reference to those facts. Otherwise, there would be no necessity of a statement of a case or any addition or alteration in that statement. It would be sufficient merely to put an abstract questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1983 (1926 to 1927). Prior to the year 1927-28, the assessee could only have been the joint family. The family did not treat the accrued interest as a part of their profits and did not pay any income-tax on the same. In the profit and loss account, the assessee, Mr. Shiva Prasad Gupta, treated the accumulated interest as his income for the year 1983. This treatment by Mr. Gupta was only for the purpose of ascertainment of his own financial position. It would be an untrue statement of fact if we said that the accumulated interest of 5 years was Mr. Shiva Prasad's income in one particular year, namely 1983. But he is prepared to allow the income-tax authorities to treat the entire accumulated interest as his income for the "previous year," provided he is allowed to set off against the interest, that accrued in a particular year, the loss that was incurred in the business (press) or due to a particular debt becoming irrecoverable in that particular year. This is a perfectly fair and equitable position and is not in any way discountenanced by Section 13, Income-tax Act. Section 13, Income-tax Act is a very fair section if properly understood. It says that when an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case before me, the income-tax officer accepts the "book income" of any particular year, say for example, the year 1979 as the assessee's income, because the assessee, in his "profit and loss account" has taken the book income of 1979 Samvat as his income. But when the assessee ascertained also his losses for the year 1979 in order to ascertain his actual book income for 1979 samvat, the income-tax officer says: "you ought to have done that in the year 1979 and you cannot do it now." The simple and honest answer to that would be: In the year 1979, the accrued interest was never treated as a part of the income and, therefore, the accrued losses were never deducted out of the income. 18. To my mind, it is manifestly unjust that in treating the book income as the actual income, the losses, which would have been deducted if the book income had been treated as the actual income in a particular year, by the assessee, should not be deducted. 19. My answer to the question formulated above, at p. 7, therefore, is that the assessee is entitled to have deducted from his estimated income the actual losses that may have been suffered in a particular year and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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