Set-off of exempt-income losses denied where the loss was not from taxable profits under a chargeable head.

Loss attributable to income exempt under section 4(3)(xii) could not be set off against income under other heads under section 24(1). The exemption was treated as absolute for the relevant period, so no taxable computation of income or loss from the building arose under section 9. Section 24(1) applies only to losses of profits or gains under a chargeable head in section 6; a loss linked to exempt income is not a loss of taxable profits. Authorities cited for the assessee were distinguished because they did not establish any general right of set-off for exempt-income losses.

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Issues: Whether a loss arising from a building whose property income was exempt under section 4(3)(xii) could be set off against the assessee's income under other heads under section 24(1).

Analysis: The exemption under section 4(3)(xii) was held to be absolute for the relevant period, so the income from the building could not be brought into the total income even for rate purposes. On that footing, no computation of income or loss from that property under section 9 arose. Section 24(1) permits set-off only where an assessee sustains a loss of profits or gains under one of the chargeable heads in section 6, and a loss attributable to exempt income cannot be treated as a loss of taxable profits. The decisions relied upon by the assessee were distinguished on the ground that they did not lay down any general rule permitting set-off of losses linked to exempt income.

Conclusion: The loss of Rs. 69,265 could not be set off against income under other heads, and the answer was against the assessee and in favour of the Revenue.

Ratio Decidendi: A loss can be carried forward or set off under section 24(1) only if it is a loss of taxable profits or gains under a chargeable head; loss referable to income exempt from tax cannot be set off against income under other heads.

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