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TMI Blog1964 (4) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the speculative dealings, and directed the Income-tax Officer to carry forward that loss for being set off against the profits from speculative dealings in subsequent years. In appeal before the Appellate Tribunal, the assessee contended that the loss of ₹ 7,254 from speculative dealings should be set off against the profits from other businesses for the purpose of computing the profits and gains under section 10(1) of the Act. This claim was negatived by the Appellate Tribunal, which relied upon the first proviso to section 24(1). Accordingly, the following question has been referred: Whether the speculation loss can be set off against the profit from any other business activity under section 10 in spite of the first proviso to section 24(1)? Section 10(1) provides: 10. (1) The tax shall be payable by an assessee under the head 'Profits and gains of business, profession or vocation 'in respect of the profits or gains of any business, profession or vocation carried on by him. And section 24(1), at the relevant time, declared: 24. (1) Where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofits and gains referred to in sub-section (1) of section 4 computed in the manner laid down in this Act. And section 4(1) provides that the total income of any previous year of any person includes all income, profits and gains from whatever source derived which are received or are deemed to be received, accrue or arise or are deemed to accrue or arise in the circumstances classified in that sub-section. Then section 6 divides the total income chargeable to income-tax into six heads of income, profits and gains, one of them being profits and gains of business, profession or vocation , while the others are salaries , interest on securities , income from property , income from other sources and capital gains . Then follow provisions indicating how the income, profits and gains under these several heads should be computed, and one of these provisions is section 10. Having provided this, the Act then proceeds to detail the procedure which must be followed for assessing the total income, determining the sum payable on the basis of that assessment and requiring the payment of that sum. The income, profits and gains computed under the several heads are, during the process of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting of speculative transactions. In other words, when applying the rule of set-off incorporated in section 24(1), the profits and gains under the aforesaid head which will be set off is not that computed under section 10 but that determined after ignoring the loss on speculative transactions which is in excess of the profits in any other business of the same nature. On this construction, the proviso appears to be a provision enacted for the purpose of limiting or curtailing the set-off available under section 24(1). The contention that the proviso does not relate at all to section 24(1) cannot be accepted. The construction which we are inclined to place upon the proviso appears to us to be reasonable. If the proviso can be reasonably related to the provisions of section 24(1), there is no reason why it should not be considered in its true character to be a proviso to section 24(1). It might be said that one central idea runs through the entire body of section 24(1), namely, the formulation of the rule that, in determining the aggregate income of an assessee, the loss of profits or gains under one head shall be set off against the income, profits or gains under another head, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e head 'profits and gains of business, profession or vocation'. He reasoned that the computation of profits and gains chargeable under that head was a matter falling for consideration under section 10 and, therefore, the proper time when this proviso could be said to operate was when the computation was made under section 10. He pointed out that when one came to the stage of applying section 24(1), the computation of the profits and gains chargeable under the head profits and gains of business, profession or vocation had already been completed under section 10. He observed: It was entirely unnecessary to compute the profits and gains of business, profession or vocation for the purpose of section 24(1) because that had already been done under section 10(2). In view of the construction which, we think, can fairly be placed upon the proviso, we find ourselves, with respect, unable to agree with the view expressed by the Bombay High Court. The learned judges of the Bombay High Court did not consider that the profits and gains falling under the head profits and gains of business, profession or vocation could be required to be computed for two distinct purposes, on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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