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TMI Blog1962 (4) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... ears 1952 and 1953. The two Members of the Appellate Tribunal, Messrs. Sambamurthi and Sankararaman, who heard the appeal, in the first instance, differed on the following point: Whether the losses of ₹ 26,248 and ₹ 14,043 incurred by the assessee in the settlement of forward contracts in cocoanut oil in which also he traded in during the calendar years ended 1952 and 1953, the 'previous years' for the respective assessment years 1953-54 and 1954-55, are deductible as business losses under section 10 in the respective assessments? The President then made a reference under section 5A(7) of the Act to three other Members of the Tribunal including himself. Those three members agreed with Mr. Sankararaman and held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no application to a case like the one before us where the loss under one head is sought to be set off against the profit under that head itself. In Anglo-French Textile Co. Ltd. v. Commissioner of Income-tax [1953] 23 ITR 82 ; [1953] SCR 448 the Supreme Court referred to the decision of the Privy Council in Arunachalam Chettiar v. Commissioner of Income-tax [1936] 4 ITR 173 (PC) and said: ...a set-off under section 24(1) can only be claimed when the loss arises under one head and the profit against which it is sought to be set off arises under a different head. When the two arise under the same head, of course, the loss can be deducted but that is done under section 10 and not under section 24(1) . Normally a proviso to a section i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme of the Act, that the Legislature in enacting the so called proviso was enacting 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 what the Legislature provided was that when you compute these profits and gains, the loss sustained in a speculative transaction must not be taken into account except to the extent of the amount of profits and gains, if any, in any other business consisting of a speculative transaction. In other words, the learned judge repelled the assessee's contention that the proviso to section 24(1) can be considered only as an abridgement of the right conferred by that sub-section. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section, and in construing statutes the operation of a proviso must ordinarily be confined to cases which might otherwise fall within the section, the Legislature may enact a substantive provision in the garb or guise of a proviso, and if the court is satisfied that the language used in the so called proviso is clearly wider in its scope, and is itself a substantive provision, effect must be given to the language used by the Legislature. The decision was followed by the High Court of Madhya Pradesh in Commissioner of Income-tax v. Ramgopal Kaniyalal [1960] 38 ITR 193 and by the High Court of Punjab in Commissioner of Income-tax v. Hukamchand Dalal [1962] 44 ITR 614, 618. We too are in respectful agreement with the view expressed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's oil mill he was also selling oil purchased by him. In the background of the trade and the figures available we are inclined to agree with Mr. Sambamurti when he says : It does not appear to me that the transactions in question amount to anything but genuine hedging. The quantity involved in these contracts is well within reasonable limits. It follows that we must answer the first question in the negative and the second in the affirmative, or, in other words, both the questions in favour of the assessee. We do so, though in the circumstances of the case, without any order as to costs. A copy of this judgment under the seal of the High Court and the signature of the Registrar will be forwarded to the Appellate T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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