Assessee cannot choose carry forward of business loss for set-off against future profits.

The High Court held that the assessee did not have the option to carry forward business loss for set off against future profits. The Court ruled in favor of the Revenue, stating that the language of the Income-tax Act did not grant the assessee the discretion to choose how to set off losses against income from other heads, except for income under the head "Capital gains."

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Issues involved: The issue involved in this reference is whether the assessee has a choice in respect of setting off of business loss against income from other heads of the same year.

Summary:
The assessee, a sterling company with a branch in India, suffered a business loss during the assessment year 1967-68. The Income-tax Officer rejected the assessee's claim to carry forward the business loss for set off against future profits, citing section 71(1) of the Income-tax Act, 1961. The Appellate Assistant Commissioner upheld the Income-tax Officer's decision, stating that no option was given to the assessee regarding set off of business loss against income from other sources. However, the Tribunal accepted the assessee's contentions, emphasizing that the assessee should have the right to choose how to set off losses for tax purposes.

The Tribunal highlighted that the language used in sections 71 and 72 of the Act supported the assessee's position, indicating that the assessee had the right to decide how to set off losses for tax purposes. The Tribunal's decision was challenged by the Revenue, arguing that the assessee did not have the option to set off business loss against income from other heads. The High Court analyzed the relevant sections of the Act and concluded that the expression "be entitled to" in section 71 did not grant the assessee the option to set off business loss against income from other heads, except for income under the head "Capital gains."

In conclusion, the High Court ruled in favor of the Revenue, stating that the assessee did not have the option to carry forward business loss for set off against future profits. The Court emphasized that the language of the Act did not provide the assessee with the discretion to choose how to set off losses against income from other heads.

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