V.Bhargava, J. - (1.) The following question has been referred by the Income-Tax Appellate Tribunal for the opinion of this Court: "Whether on the above facts and the findings of the Tribunal, the assessee is entitled to claim deficiency attributed to the chargeable accounting period under consideration against the excess profits in the preceding chargeable accounting periods?"
(2.) The assessee is an individual who was carrying on business in cloth and cotton, During the chargeable accounting period commencing from 8-11-1942, and ending on 30-9-1943, he was assessed to excess profits tax. On 30-9-1943, the assessee closed his business and went to his place of origin. He returned to the place where he was carrying on the business and then on 24-3-1944, he started a new business in cloth and cotton. This business was carried on upto 28-5-1945. During this period between 24-3-1944, and the 28-5-1945, the assessee earned profits which were far below the standard profits of his earlier business which had been assessed to the excess profits tax mentioned above. The assessee claimed that the deficiency of profits in his business, which was run between the 24-3-1944 and 28-5-1945, should be set off for the purpose of reducing the excess profits tax which had been assessed on his business for the chargeable accounting period from 8-11-1942 to 30-9-1943. One of the contentions of the assessee was that, when he started the business on 24-3-1944, he did not start a new business at all and that it was a continuance of his old business. This contention was rejected by the Income-Tax Appellate Tribunal which held that it was really a new business. According to the statement of the case sent up by the Tribunal, this finding of the Tribunal was not challenged by learned counsellor the assessee before the Tribunal when the application under Section 66(1) of the Income-Tax Act read with Section 21 of the Excess Profits Tax Act was argued. Further, as remarked by the tribunal, this was a finding of fact. Accepting this finding of fact, however, it was contended by the assessee that he was still entitled to deduct the deficiency of profits in his new business out of the excess profits which had been earned by him and on which tax had been charged during the chargeable accounting period from 8-11-1942 to 30-9-1943. In these circumstances, the Tribunal has described the period beginning on 24-3-1944, and ending on 28-5-1945, as the chargeable accounting period under consideration and the period between 8-11-1942, and 30-9-1943, has been described as the preceding chargeable accounting period. It is on the basis of this description that the question has been framed by the Tribunal in the form reproduced above.
(3.) On behalf of the assessee, reliance has been placed on the provisions of Sections 5 End 7 of the Excess Profits Tax Act and, further, on the second proviso to Clause (5) of Section 2 of the Excess Profits Tax Act.;