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TMI Blog1962 (3) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Act? and (ii) Even otherwise, whether the assessee is not entitled to a setoff of this loss against his other business income falling under section 10 of the Act? The material facts may be briefly narrated. The assessee carries on business as merchant and commission agent in several commodities, both ready business and forward business being done in such commodities. In the assessment year 1954-55 for which the previous year is the Dewali year ended November 6, 1953, the assessee adjusted a loss of ₹ 28,839 sustained in certain forward transactions relating to new gunnies against the other profits earned in other business. Originally, he had entered into forward contracts for the purchase of 777 bales of gunni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in section 6, he shall be entitled to have the amount of the loss set of against his income, profits or gains under any other head in that year. The proviso to this section, which was incorporated in the Indian Income-tax Act in 1953, is to the following effect: Provided that in computing the profits and gains chargeable under the head 'profits and again of business, profession or vocation,' any loss sustained in speculative transactions which are in the nature of a business shall not be taken into account except to the extent of the amount of profits and gains, if any, in any other business consisting of speculative transaction. It is seen that this proviso lays down the mode in which the profits and gains of busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-matter of the main section; it is the duty of the court to give to the proviso as far as possible a meaning so restricted as to bring it within the ambit and purview of the section itself. The learned judge added: If a proviso is capable of a wider connotation and is also capable of a narrower connotation, if the narrower connotation brings it within the purview of the section, then the courts must prefer the narrower connotation rather than the wider connotation. We may also usefully quote the observations of Lord Macmillan in M. S.M. Railway v. Bezwada Municipality [1944] 2 M.L.J. 25 (P.C.); A.I.R. 1944 P.C. 71 in this context: The proper function of a proviso is to except and deal with a case which would otherwise fall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the proviso is couched, the concept of speculation is foreign to other heads. There is no question of making gains in speculation under any of the heads enumerated in section 6 except the head business, profession of vocation. There would be no element of speculation present in items other then number four described in that section. Section 6 of the Indian Income-tax Act sets out the heads of income chargeable to income-tax, one of them being under the fourth head profits and gains of business, profession or vocation . Section to makes the tax payable by an assessee under the head profits and gains of business, profession or vocation in respect of the profits and gains of any business profession or vocation. Section 10(2) provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions. There, it was ruled that this proviso amounted to a substantive provision dealing with the mode of computing the profits and gains chargeable under the head profits and gains of business, profession or vocation and that as such it would govern section 10 of the Indian Income-tax Act which deals with computation of profits and gains under the fourth head falling under section 6 of the Act. This was followed by the Punjab High Court in Commissioner of Income-tax v. Hukam Chand Dalal [1962] 44 I.T.R. 614 and Manohar Lal Munshi Lal v. Commissioner of Income-tax [1962] 44 I.T.R. 618. This view was shred by the High Court of Madhya Pradesh in Commissioner of Income-tax v. Ramgopal Kaniyalal [1960] 38 I.T.R. 193. Our attention ..... X X X X Extracts X X X X X X X X Extracts X X X X
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