9911796707
TMI Blog1978 (1) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... r than the Jaipur State, the assessee had earned a total profit of Rs. 3,01,792. It has been mentioned by the Tribunal that the amount has been wrongly mentioned in the Tribunal's order as Rs. 3,01,798. In the Jaipur State, however, the assessee had suffered a loss of Rs. 1,24,132. In the Indian States, taken together, the assessee had earned a net income of Rs. 1,77,660. In computing the total income of the assessee, the ITO had excluded this net income of Rs. 1,77,660 only as being exempt under s. 14(2)(c) of the I.T. Act, 1922. From the ITO's order, it is not clear whether the assessee had claimed that the amount exempt in terms of s. 14(2)(c) of the Act was Rs. 3,01,792 and not the amount of Rs. 1,77,660, the loss of Rs. 1,24,132 having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refer to the relevant provision of s. 14, as it stood, at the relevant time. S. 14(2) provided as follows : S. 14. Exemptions of a general nature : ...... (2) The tax shall not be payable by an assessee--....... (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 s. 12B or s. 42. S. 24 which dealt with the set-off of loss in computing aggregate income was to the following effect : " S. 24. Set off of loss in computing aggregate income-- (1) Where any assessee sustains a loss of profits or gains in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins in the business has been made exempt under cl. (c) of sub-s. (2) of s. 14 because the said sub-clause in the said section provides that no tax shall be payable in respect of any income or gain accruing or arising to him within an Indian State. We are excluding the other exemptions with which we were not concerned in this reference. If that is the position, then, on the construction of the section as applied to the facts of this case, it would be clear that what was excluded under cl. (c) of sub-s. (2) of s. 14 was the sum of Rs. 3,01,792 and not the only reduced sum of Rs. 1,77,660 after setting off the loss of Rs. 1, 24,132. Indeed, as we have noticed before, there was no scope for setting off of the loss against the income because the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be set off against profits in the proviso to s. 24 would not be sufficient to restrict the scope of the proviso to the profits and losses arising under the head " Business " in the two territories, that is, British India and the Indian States. The proper function of a proviso, according to the Supreme Court, was that it qualified the generality of the main enactment by providing an exception and taking out as it were, from the main enactment, a portion which, but for the proviso, would fall within the main enactment. Ordinarily, it was foreign to the proper function of a proviso to read it as providing something by way of an addendum or dealing with a subject which was foreign to the main enactment. The territory of a proviso, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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