Law: Income Tax Act, 1922

Section: 24

Law: Income Tax Act, 1961

Section: 34,34D,34A,256(1),226(1)

Income-tax Act (XI of 1922)---S. 24-[S.226(1) Indian Income-tax act , 1961 corresponds to S.34 & D.34-A of Income Tax Ordinance, 1979.]'Indian Income-tax Act, 1961, S. 256(1)--Carry forward and set-off of losses--Benefit conferred under S. 24 of the Act, 1922 continued to be given effect under Ordinance, 1979, notwithstanding the wordings of relevant provision of the Ordinance, 1979. JUDGMENT RANGANATH MISRA, J.--This appeal is by special leave and the judgment of the Allahabad High Court on a reference under section 256(1) of the Income Tax Act, 1961 (hereafter referred to as 'the Act' is assailed by the Revenue. 2. The relevant assessment year is 1965-66 corresponding to the previous year ending on 31st December, 1964. In its return the assessee, a private limited company disclosed capital gains of Rs. 3,10,200 but claimed set-off of capital loss of Rs. 3,17,500 sustained by it during the assessment year 1957-58 over sale of shares to three associate concerns. It was maintained by the assessee that the loss was sustained in the previous year relevant to the assessment year x1957-58 and the same should be set-off against the capital gains in the assessment year in question. The Income Tax Officer disallowed the claim for set-off on the footing that when in the assessment year 1957-58 the loss was claimed it was excluded in the computation of income as capital loss and the Appellate Assistant Commissioner while disposing of the assessee's appeal had stated that it was a notional capital loss. As no further appeal was carried by the assessee, with the first appellate order the matter had become final. 3. The assessee challenged the rejection of its claim of set-off before the Appellate Assistant Commissioner and he dismissed the appeal by holding that there was no genuine loss; it was essentially notional in nature and that the claim for set-off to be admissible had to be notified by the Income Tax Officer under section 24(3) of the 1922 Act to the assessee by an order in writing. That having not been done, the claim was not admissible. Thereupon, the assessee went before the Appellate Tribunal and reiterated its claim. The Tribunal came to the conclusion…

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