TaxTMI 
TaxTMI 
1962 (2) TMI 8
X X X X Extracts X X X X
X X X X Extracts X X X X
....tish India. For and up to the assessment year 1949-50, the assessee-company was treated as a non-resident within the meaning of section 4A of the Indian Income-tax Act, 1922. For the assessment years 1950-51 and 1951-52, which are the two assessment years under consideration, the account years were the calendar years 1949 and 1950 respectively. Indore became a part of the taxable territories within the meaning of the Indian Income-tax Act in the two assessment years and the assessee-company was held to be " resident and ordinarily resident " within the meaning of that Act. Up to the assessment year 1949-50, that part of its profits which was received in British India was subjected to tax together with its other income which accrued in British India, namely, interest on securities and interest on bank accounts. In the assessments made for the assessment years 1948-49 and 1949-50 the position of the assessee-company was stated to be as follows : 1948-49 Rs. Income under the head " Interest on securities " ... 1,032 Income under the head " Other sources---Interest from banks " ... 231 ----------- 1,263 ----------- Business loss Rs. 1,992. Balance of loss Rs. 729 carried ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0 5,46, 322 21, 028 1,467 22,495 60,000 1,992 1,263 729 (loss) (loss) --------------------------------------------------------------------------------------------------------------------------------------------------- During the course of the assessment proceedings for 1950-51 the assessee-company claimed that it was entitled to a set-off of the entire losses of the assessment year 1948-49 which, it was common ground before the Tribunal, came to Rs. 5,19,590, and not merely the proportionate loss. The assessee-company also claimed that the depreciation allowances of the two years 1948-49 and 1949-50 to which effect could not be given in those years and which had, therefore, to be carried forward should be added to the depreciation allowance of 1950-51 and be set off against the profits and gains of the assessee-company liable to assessment in the assessment years in question. It is to be noted that the assessment of the assessee-company for the assessment years 1948-49 and 1949-50 was made both under the Indian Income-tax Act and under the Indore Industrial Tax Rules, 1927. Now, the assessee-company made two claims in the course of the assessment proceedings for 1950-51. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate businesses, one within the taxable territories and the other outside them. Mr. Kolah has contended that the business was one business within the meaning of section 10 of the Indian Income-tax Act and in the two assessment years in question Indore having become a part of the taxable territories, the provisions in sub-section (2) of section 24 came into operation ; therefore, the losses which the assessee company sustained in 1948-49, being a previous year not earlier than the previous year mentioned in the sub-section and the losses not having been set off under sub-section (1) of section 24, the assessee company was entitled to carry forward the losses and set them off against the profits and gains of the assessee company from the same business under any other head, as the time limit of six years had not expired. As against this argument, the contention on behalf of the respondent has been that section 24 has no application in the facts of the present case inasmuch as in the year 1948-49 in which year the losses had occurred, the assessee company was treated as a non-resident. On behalf of the respondent it has been submitted that the provisions of section 24 are applicable onl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ead in that year : Provided that, where the loss sustained is a loss of profits or gains which would but for the loss have accrued or arisen within an Indian State and would, under the provisions of clause (c) of sub-section (2) of section 14, have been exempted from tax, such loss shall not be set off except against profits or gains accruing or arising within an Indian State and exempt from tax under the said provisions .......... (2) Where any assessee sustains a loss of profits or gains in any year, being a previous year not earlier than the previous year for the assessment for the year ending on the 31st day of March, 1940, under the head 'Profits and gains of business, profession or vocation', and the loss cannot be wholly set off under sub-section (1), the portion not so set off shall be carried forward to the following year and set off against the profits and gains, if any, of the assessee from the same business, profession or vocation for that year ; and if it cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following year, and so on ; but no loss shall be so carried forward for more than six years : Provided that (a) wher....
X X X X Extracts X X X X
X X X X Extracts X X X X
....here. The liability to tax in respect of income received in India is common to both residents and non-residents and is imposed by the general clause (a). A non-resident, unlike a resident, is not chargeable in respect of income accruing or arising without India and not received in India. Section 14(2)(c), which is now deleted, had great importance when British India was distinct from Indian States, because it exempted income which accrued or was received in the Indian States but was not brought into British India, The deletion of this clause became inevitable upon the merger of the Indian States. This clause which was inserted in 1941 exempted income accruing or arising within the Indian States ; but the exemption did not apply if the income was received or deemed to be received in or was brought into the taxable territories in the previous year by or on behalf of the assessee or if the income was assessable under section 12B or section 42. The position, therefore, was that losses made in British India could not be reduced by adjusting against them the profits in the Indian States which were exempted under the clause, but the income exempted from the clause had, however, to be incl....