1968 PLP 520 (PTD)

Section 6 of the Act, which occurs in Chapter III which relates to taxable income, provides that the following heads of income shall be chargeable to Income‑tax. "(i) Salaries (ii) Interest on securities (iii) Income from property (iv) Profits and gains of business, profession or vocation (v) Income from other sources (vi) Capital gains." The provisions relating to interest on securities is to be found in section 8, Section 9 provides for levying taxes on property. Both these sections also provide for certain allowance to be made in computing the income on interest on securities and from properties. It is not the contention of the assesse that the allowances permissible under the Act have not been granted to the assessee. What is, however, contended by Mr. Ruhul Islam is that by reason of section 24, loss incurred by the assessee in regard to its banking business should have been allowed to be set off from the income derived under the head interest on Securities and income from property. It will be seen that neither section 8 nor section 9 provides for an allowance being granted for liquidation expenses. Mr. Islam's contention to the effect that such allowances are to be granted by reason of the provisions of section 24 of the Act cannot be entertained, for the simple reason that sec tion 24 contemplates such a set‑off in regard to an existing business. In making the winding up order on 24‑2‑55 Akbar, J (as his Lordship then was) observed: "From the observations quoted above, it is abundantly clear that in the interests of the creditors, the depositors and the public, this Bank should not be allowed, to function any more and should be wound up immediately." Subsection (1) of section 24 of the Act reads as follows: "Where any assessee sustains a loss of profits or gaits in any year under any of the heads mentioned in section 6, he shall be entitled to have the amount of the loss set‑off against his income, profits or gains under any other head in that year." It will, therefore, appear that the continuation of the business is necessary to claim that the loss incurred should be set off from the total income. The order in this case is that "this bank should not be allowed to function any more and should be wound up immediately." Mr. Islam's contention is that the tax is payable on the total income which is to be found out after taking into account gains and loss of a business. In the case of Re : Hadashilal Ramdayal (9 I T R 635), a Division Bench of the Allahabad High Court consisting of Colliete and Rajpal, JJ. held that an assessee who had three shops was entitled to set‑off the losses claimed by him against the profits made in other two shops. In that case business itself was not closed. In the case of B. C. G. A. (Punjab) Ltd., Khanewal v. Commissioner of Income‑tax, Punjab (I L R 18 Lah. 306) a Full Bench' of that Court held that a person carrying on different trades is entitled to set‑off, for purposes of income‑tax, for the loss incurred by him in respect of one against the profits made by him in the other, but the, condition precedent is that both the businesses should be in existence. In the case before us the Tribunal has found in its order dated 7‑1‑62 as follows: "It is clear that the High Court has stopped the banking operation merely but the Management of the properties and securities by their very nature yield income." This finding indicates that so far as the banking business is concerned it is at an end. The expenses incurred for earning income on securities and also the property from which rent had been earned would be deducted as permissible under the provi sions of sections 8 and 9, but a set‑off cannot be claimed for the non‑existent business: For the reasons stated above, we answer the question (1) in the affirmative and questions Nos. 2 and 3 in the negative. There will be no order as to costs. A. H. KHAN, J.‑I agree. S. Q. Questions answered.