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TMI Blog1960 (1) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... e from various sources in Part A and Part B States and the income was taxable under the Indian Income-tax Act read with the Part B States (Taxation Concessions) Order, 1950. In the year of account, the business in Part A States resulted in a loss of ₹ 9,156 and there was also a loss in business in Part B States amounting to ₹ 1,19,026. The dividend income from the companies registered in Part A and Part B States was respectively ₹ 10,675 and ₹ 64,926. The income from other sources in Part A and Part B States amounted to ₹ 81,233. In determining the net income, which was found to be ₹ 28,652, the Income-tax Officer set off the loss from business in Part B States against the dividend income from the companies registered in Part B States. The assessee's claim that the loss could not be set off against the dividend income, which was exempt from tax under paragraph 12 of the Part B States (Taxation Concessions) Order, 1950, was rejected by the Income-tax Officer. The Appellate Assistant Commissioner upheld this set-off. The Tribunal differed from the view taken by the Income-tax Officer and the Appellate Assistant Commissioner, and came to the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not set off the business loss against the dividend income from Part B States under section 24 of the Income-tax Act and that the question of set-off . under section 24(1) of the Act would arise only if there was taxable income and the dividend income being exempt from tax was not taxable income. Learned counsel relied on CIT v. Ratanshi Bhavanji [1952] 22 ITR 82 and on Bansilal Abirchand Spinning and Weaving Mills v. CIT [1957] 31 ITR 427. In our judgment, the learned Advocate-General is right in his grievance that the question framed by the Tribunal for decision fails to bring out the real point of decision. On the facts and circumstances mentioned in the statement of case submitted by the Tribunal, the question is not whether dividend income from companies registered in Part B States is exempt from taxation under paragraph 12 of the Order of 1950, when the assessee incurred business loss in Part B States. The real question that arises for consideration is as to the set-off under section 24(1). There is no dispute that during the material period the assessee resided in a taxable territory and the income which accrued to it was in a taxable territory. Therefore the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see for the year ending on 31st March, 1951, only and not to exempt them totally from tax. It is, therefore, erroneous to say that under paragraph 12 such dividend income is exempt from tax and, therefore, it is not a taxable income or that it cannot be included in the total income. It is plain from the language of paragraph 12 that it would come into play only when he has some income assessable to tax. If there is no net income or gain on which income-tax has to be paid and thus no question of payment of income-tax, there can be no question of the assessee being given any relief in the payment of income-tax as provided by paragraph 12 on the dividend income. If, therefore, the dividend income on being adjusted against the loss still showed net loss for the year ending on the 31st March, 1951, no question of granting any relief under paragraph 12 in the matter of payment of income-tax on dividend income can arise. This sufficiently disposes of the question stated for our decision by the Tribunal. But it does not touch the real question whether the business loss can be set off under section 24(1) against dividend income from companies registered in Part B States. Coming now to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the case of Bansilal Abirchand Spinning and Weaving Mills v. CIT [1957] 31 ITR 427, that the losses made in British India could not be reduced by the Department by adjusting against them the profits in the Indian States which were exempted under clause (c) of subsection (2) of section 14 (which has now been deleted). In CIT v. Ratanshi Bhavanji [1952] 22 ITR 82 , also it was held that section 24(1) speaks of set-off against income which has not already suffered tax but income in respect of which tax could be levied and collected. It must, however, be remembered that the Madras case was not a case of set-off of loss under a taxable head against income under a non-taxable head. In that case, a loss incurred by a person in speculation was not allowed to be reduced by the Income-tax Department by set-off against the taxed share of a person's profits in an unregistered firm in order to determine the loss to be carried forward under section 24(2) on the ground that so to do would be to deprive him of the relief from tax in succeeding years to the extent of such set-off, and this would in effect mean subjecting to double taxation his profits in the unregistered firm. Here, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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