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TMI Blog1957 (1) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... by the provisions of section 42 ? (2)Whether on the facts of the case a loss of ₹ 22,981 is allowable in computing the income of the assessee chargeable to the excess profits tax ? 2. The case arises out of the assessment of the respondent firm, Messrs. Chuni Lal Monga Ram for the year 1946-47 to income-tax, and to excess profits tax for the period ending 6th February, 1946. The assessee firm carries on a speculation business at Delhi. Forward transactions are entered in various bullion markets, and on certain transactions entered into with firms at Bhatinda in the then State of Patiala losses of ₹ 6,366 and ₹ 16,615 were incurred. The question arose whether in view of the fact that according to the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rose, but the assessee objected to the framing of the second question. His objections on this point were, however, overruled. 3. It appears that the point raised in the first question is virtually settled law, since it is admitted that the only High Court in India which now takes the view that losses incurred by an assessee in British India on business transacted in an Indian State could not be taken into account in assessing his income from business by virtue of the provisions of the Income-tax Act relied on by the Commissioner, is the Allahabad High Court, and the other courts, including our own, have taken the contrary view. The latest decision of this court by my Lord the Chief Justice and myself on this point is in Commissioner of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdinarily resident in British India unless the business is controlled in India : Provided further that where the profits of a part only of a business carried on by a person who is not resident in British India or not ordinarily so resident accrue or arise in British India or are deemed under the Indian Income-tax Act, 1922, so to accrue or arise, then, except where the business being the business of a person who is resident but not ordinarily resident in British India is controlled in India, this Act shall apply only to such part of the business, and such part shall for all the purposes of this Act be deemed to be a separate business : Provided further that this Act shall not apply to any business the whole of the profits of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any chargeable accounting period, or are assessable under section 42 of that Act. 7. It is, however, clear that neither the old nor the new proviso mentions losses, and it would appear to me that the only real difference is that whereas under the Excess Profits Tax Act profits made on business in an Indian State were on no account to be taken into consideration in the assessment of excess profits tax in British India, whether such profits were allowed to remain where they were or were brought by the assessee into British India, the proviso in the Business Profits Tax Act has been amended so as to incorporate the principle of section 14(2)(c) of the Income-tax Act, so as to make profits accruing from business in a Part B State assessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t language of the Excess Profits Tax Act from that of the Income-tax Act, no distinction has ever been drawn in this matter between the principles governing assessment to income-tax and the principles governing assessment to excess profits tax, and in fact it would appear to have been the universal practice that decisions of the Income-tax authorities and High Courts have been followed by consequential orders relating to the same assessee's taxable income for the purpose of the Excess Profits Tax Act, and the learned counsel for the Commissioner has not been able to cite any decision in which different principles have been applied on this particular matter. Admittedly, one of the reasons given in his judgment by Chagla, C.J., for coming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it therefore seems to me that, whether profits result or losses are incurred as the result of transactions of this kind even with firms in Indian States, the profits accrue or the losses are incurred at the place where the payments are received, or from which they are made, namely the firm's place of business at Delhi. It was the case of a similar firm with which my Lord the Chief Justice and I were dealing in Commissioner of Income-tax, Delhi v. Gajja Nand Gobind Ram [1955] 28 ITR 499 and we held that in such circumstances no question arose of the application of section 14(2)(c) of the Income-tax Act. The result is that I would answer the second of the questions framed in the affirmative. The Commissioner is directed to pay the costs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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