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TMI Blog1953 (6) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and gains in British India in the same period in order to arrive at the asses-see's taxable income under the Income Tax Act, 1922. 2. According to the statement of the case as explained by counsel the assessee is a registered firm resident in Ludhiana. The year of assessment is 1949-50 and the accounting year is 1948-49. The assessee carried on business in Ludhiana and Ahmednagar in Maler-kotla State and kept accounts in accordance with the Mercantile system of accounting. In the accounting year the profit which accrued to the assessee was ₹ 72,203/- and this was from its business in what at one time was British India. In their business at Malerkotla there was a loss of ₹ 43,263/-. There were some other items which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried on by him. (2) Such profits or gains shall be computed after making the following allowances namely : * * * Section 14 gives exemptions of a general nature and Section 14(2)(c) was as follows at the relevant time : 14(2)(c) in respect of any income, profits or gains accruing or arising to him within an Indian State unless such income, profits or gains are received or deemed to be received in or are brought into British India in the previous year by or on behalf of the assessee, or are assessable under Section 42. Section 16 deals with exemptions and exclusions determining the total income. It is not necessary to quote this section. Section 24 deals with computing of aggregate income and to Section 24(1) a proviso was added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 14(2)(c) the loss of that business should also not be deducted. Now, in order to determine the profits of a business under Section 6(iv). Income Tax Act. computation has to be made in accordance with Section 10 of that Act which section use_s the words, The tax shall be payable * * in respect of the profit or gains of any business carried on by him (the assessee). There is no reason, why for the purposes of this Act any business carried on by an assessee should be read only as business in what was British India. 5. In a Madras case -- 'V. Ramaswami Ayyanagar v. Commr. of Income Tax, Madras', AIR 1950 Mad 454 at p. 455 (C), it was held that in Section 6 there is no basis for restricting the words business, profession or voc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is done under Section 10 and not under Section 24(1), Income Tax Act. Reference was made by their Lordships to a decision of the Privy Council in -- 'Arunachalam Chettiar v. Commr. of Income Tax, Madras', AIR 1936 PC 133 at p 136 (E). In that case Sir George Rankin observed at p. 136 : In their Lordships' opinion whether a firm is registered or unregistered, partnership does not obstruct or defeat the right of a partner to an adjustment on account of his share of loss in the firm, whether the set off be against other profits under the same head of income within the meaning of Section 6 of the Act or under a different head in which case only need recourse be had to Section 24(1). These two judgments show that in com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24 comes into operation and various considerations will arise whether he is entitled to such a set off or not. 8. A similar question again came up for decision and this time in the Nagpur High Court. In -- 'the Commr. of Income Tax, Madhya Pradesh Nagpur v. C. P. Syndicate, Nagpur AIR 1953 Nag 77 (F), it was held that Section 10 which deals with income from business is self contained. Profits from all businesses after deducting the allowances permissible under this section constitute profits of the assessee from business. In computing profits the losses have got to be taken into consideration. In that case also the assessee made certain profits in his business in India and the losses were suffered by him in an Indian State and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us. Section 4(1) of the Act provides : 4(1) Subject to the provisions of this Act. the total income of any previous year of any person includes all income, profits and gains from whatever source derived which * * * Under this Act the total taxable income would include all profits from whatever source derived. Section 16(1)(a) also provides for the inclusion of all income in determining the total income of the assessee. If the profits were to be calculated as contended for by the learned Advocate-General it will come to this that the total income for purposes of Section 16 will be less than the sum of which the Income Tax will actually be payable which in my opinion would lead to absurdity and it would also mean that under S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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