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TMI Blog1965 (7) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Tribunal was right in law in holding that an equitable apportionment of the expenses could be made by virtue of the provisions of Explanation 1 to section 24(1) of the Income-tax Act ? " The material facts are these. The assessee is an individual. During the relevant year of assessment, which is the assessment year 1956-57, the previous year being the year ended Bhadon Sudi 2, Sambat 2012, he carried on business in speculation and money-lending at Agra in the name of Makhan Lal Ram Swarup, hereinafter referred to as head office. He also carried on another business under the name and style of Messrs. S. D. Gupta Co., hereinafter referred to as the branch, in which the business was confined to speculation business alone. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion profit in the branch which was computed at Rs. 96,612. In setting off the loss of Rs. 1,02,451, which was the gross loss and not the net loss at the head office he added, on an estimate basis, expenses of Rs. 3,000 out of the total expenses of Rs. 24,527 claimed by the assessee. The result was that the gross loss in the head office of Rs. 1,02,451 increased by Rs. 3,000. The net loss, therefore, at the head office from speculation was determined at Rs. 1,02,451 and setting this off against the profit of Rs. 96,612, the net loss of Rs. 8,839 was directed to be carried forward and set off against future speculation profits. The only objection taken by the assessee was to the addition of Rs. 3,000 as estimated expenses in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order the present reference has been made under section 66(1) and the question set out hereinabove has been referred. Mr. Kirti relying upon the decision of this court of which one of us was a member in Jagannath Mahadeo Prasad v. Commissioner of Income-tax contended that the Tribunal was in error in relying upon the explanation to section 24(1) of the Act and if the explanation to section 24(1) has no application then according to him the provisions of section 10(2) do not permit the splitting up or apportionment of the expenses of various businesses that may be carried on by the assessee. There is no force in this contention. All that was held in that case was that for the purpose of computing the profits and gains from business und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings nor is the principle of res judicata applicable. Therefore, the question that will still remain to be considered is, whether the Income-tax Officer was debarred by an express prohibition contained in section 10 or any other provision of the Act, from apportioning the expenses between the two sets of businesses in order to determine the true loss which had to be carried forward ? Ordinary commercial practice and the principles of accountancy require that a person, who has several businesses, particularly if they are being carried on at different places and not under one roof, should be able to tell at a glance which business is yielding profit and which is running at a loss. Each branch ordinarily maintains its own profit and loss a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d after making the following allowances, namely: ... (xv) any expenditure (not being an allowance of the nature described in any of the clauses (i) to (xiv) inclusive, and not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purposes of such business, profession or vocation." In sub-clause (1) of section 10 the words used are " any business". When determining the profits of " any business " the expenditure wholly laid out for that business has to be allowed. " Any " does not necessarily mean one business. A person may have several businesses and though they will all be assessable under the head " business, profession or vocation" nevertheless the expense ..... X X X X Extracts X X X X X X X X Extracts X X X X
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