Law:

Section:

Section 28(i), read with section 71 of the Income-tax Act, 1961 [Corresponding to section 10 read with section 24 of the Indian Income-tax Act, 1922] - Business loss - Allowable as - Whether all businesses wherever carried on constitute one head and in order to determine what are profits and gains of a business under section 10 of 1922 Act, an assessee is entitled to show all his profits and set off against those profits losses incurred by him in same head - Held, yes - Whether where assessee a resident of British India, carried on two distinct and separate businesses one in British India and other outside British India, loss which arose in his business outside British India could be adjusted against his profits from business in British India in computing his income under head 'business' - Held, yes FACTS The assessee was carrying on two distinct and separate businesses, one in Bombay and the other at Indore. During the year of account there was profit in the Bombay business, but the business at Indore resulted in a loss. The assessee claimed that this loss should be set off against the profits realised in the Bombay business. The view taken by the ITO and the AAC was that the assessee's claim was not sustainable in view of the first proviso to Section 24. The Tribunal differed from the view taken by the ITO and the AAC and came to the conclusion that the assessee was entitled to set off the loss suffered by him in the Indore business against the profits of the Bombay business. On reference : HELD The assessee was a person resident in British India, and under section 4(1)(b)(ii ) in his total income he would have to show not only the income which accrued or arose to him in British India but also the income which accrued or arose to him without British India and therefore his income not only in the Bombay business but also in the Indore business would have to be shown in his return. Different businesses do not constitute different heads under the Income-tax Act. All businesses wherever carried on constitute one head which falls under section 10 of the 1922 Act and in order to determine what are the profits and gains of a business under section 10, an assessee is…

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