1965 PLP 348 (PTD)

Income-tax Act (XI of 1922), S. 66(2) read with S. 6-Question of fact or of law-Loss in one and income from other heads enumerated in section 6-Set off-Whether permissible-Question of law. ASIR, J.-This Rule was obtained on behalf of the Official Liquidator Pioneer Bank Limited (in liquidation) for reference of certain questions as set out in the petition in terms of section 66 (2) of the Income-tax Act. All these questions as formulated centered round the principal question as to whether the income from house property, interest on securities and other sources in the shape of business as derived by a banking concern should be treated separately or whether the entire income from all sources should be added up and then the loss, if any incurred at any source should be set off and whether in that way the net income after setting off such losses of the entire banking concern should be ascertained for assessment. In the present case it is not disputed that the banking concern had several sources of income including house properties, interest on securities and other kinds of business. The Department concerned seems to have assessed tax on the income derived from house property as also from interest and securities and it is not prepared to deduct the expenses incurred in connection with the liquidation proceedings or other affairs that have been necessary since the bank was ordered to be placed under liquidation. Mr. Huda contends that the provisions of section 6 of the Income-tax Act make it clear that the income from the various heads should be treated separately and not in an amalgamated fashion. Mr. Ruhul Islam, however, contends that it is the total income of the assessee concerned which should be determined and in that case there is enough scope for the contention that the losses incurred by the Bank either on account of liquidation or for other reasons should be set off against the income that might be derived from the house property or from the interest on securities. In our view all these contentions and other incidental point as raised from the bar require a close investigation. We do not feel inclined to agree with the Tribunal that the questions of law do not arise from the relevant judgment. In our opinion, these Rules should be made absolute at least in regard to question. Nos. 1, 2 and 4 as set out at pages 8 and 9 of the petition. (1) "Whether on the facts and circumstances of this case, that in pursuance of the winding up order passed by the High Court at Dacca the functioning of the bank was closed and the income accruing to the bank from whatever source is being deposited in the liquidation Fund, the Bank was liable to assessment under the law?" (2) "Whether on the facts and in the circumstances of this case the assessee-Bank was entitled under the law to set off the liquidation expenses against income from the "interest on securities" and "income from property?" (4) "Whether on the facts and circumstances of this case, the loss incurred by the Bank on account of liquidation expenses should have been treated as the expenses incurred for collection of the outstanding dues of a closed business." Mr. Ruhul Islam does not press question No.

3. The result, therefore, is that the Rule in each case is made absolute and the Tribunal is directed to refer the case in regard to the questions set out above. There will be no order as to costs. SALAHUDDIN AHMED, J.-I agree.