Law: Income Tax Act, 1922

Section: S. 24 (1) (2) (3)

In the matter of the INCOME-TAX ASSESSMENTS of MESSRS SHEIKCO LTD., ISMAILABAD, MULTAN   Income-tax Act (XI of 1922), S. 24 (1) (2) (3)-Interpreta tion-Return not filed by assessee-Loss remaining undetermined-- Set-off against profits not allowable --- Setoff not permissible against gains or profits of subsequent years.   An assessee is entitled to have his losses in a year set-off against his gains and profits in the year of assessment and this is a right, but it is dependent upon the loss having been ascertained, which can only be done, If a return has been filed and a regular assessment made by the Income-tax Officer, in which case, a duty is cast on the Income-tax Officer to notify the determined loss. If an assessee does not file a return for the loss year and the loss of that particular year is not determined, the benefit of set off under subsection (2) of section 24 of the Income-tax Act, 1922 cannot be availed of. Subsections (I), (2) and (3) of section 24 are intended to apply to an assessment in the same year and not to a year prior to the year of assessment, and an interpretation to the contrary is not tenable.   Anglo-French Textile Co. Ltd. v. The Commissioner of Income-tax, Madras A I R 1953 S C 111 rel.   All India Groundnut Syndicate Ltd. v. Commissioner of Income-tax, Bombay City (1954) 25 I T R 90 ; Commissioner of Income-tax, West Bengal v. Yovindalal Dutta (1958) 33 I T R 63u and Commissioner of Income-tax, Madhya Pradesh v. Khushhal Chand Dagga (1954) 42 I T R 177 distinguished.   O. M. Ahmad Shahib v. Commissioner of Income-tax, Madras (1952) 22 1 T R 87 ref.   JUDGMENT   S. A. MAHMOOD, J.-On three applications under section 66(1) of the Income-tax Act, made by the Commissioner of Income-tax, North Zone, the Income-tax Appellate Tribunal, Pakistan, has referred the following question to this Court for its opinion :-   "Whether, in the circumstances of the case, the assessee is entitled under section 24 (2) of the Income-tax Act to set-off the losses in respect of the assessment years 1947-48 and 1948-49 against the profits of the assessment year 1951-52."   The assessee Messrs…