Reassessment under income-tax law does not require loss computation unless the loss is eligible for statutory set-off.

Section 34 reassessment under the Indian Income-tax Act, 1922 is discussed as a procedure for bringing escaped income to tax, not as a basis for insisting on loss determination where no set-off issue arises. The note explains that a loss can be computed and carried forward only where the Act permits adjustment against income, profit or gain under the relevant provisions on set-off and carry-forward. In the cited dispute, the assessee's request to have a business loss recorded during reassessment was treated as outside the scope of the proceedings focused on escaped income.

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Issues: Whether, in proceedings initiated under Section 34 of the Indian Income-tax Act, 1922, an assessee whose return showed no income and only a loss could require that loss to be determined, recorded, and carried forward under Section 24.

Analysis: The statutory scheme permitted loss relief only where a loss could be set off against income, profits, or gains, and any unabsorbed balance could be carried forward only if it could not be wholly set off in the year concerned. The Court held that where there was no income at all under any head, Section 24(1) did not come into operation, and a loss arising from the same business head could not be brought within Section 24(1) because such deduction belonged, if at all, to Section 10. Since the loss could not be set off under Section 24(1), there was no basis to carry it forward under Section 24(2), and the question of recording or computing the loss in the reassessment proceedings became irrelevant.

Conclusion: The assessee was not entitled to have the loss determined or carried forward in the Section 34 proceedings, and the answer to the referred question was against the assessee.

Ratio Decidendi: A loss can be carried forward under Section 24(2) only if it is one that can first be brought within Section 24(1) for set-off against income, profits, or gains in the relevant year; where no taxable income exists under any head, no such set-off arises and the loss need not be recorded in reassessment proceedings.

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