Umamaheswaram, J. - (1.) This Reference arises under section 66 (1) of the Indian Income-tax Act, 1922. The question for decision as formulated by the Tribunal is in the following terms :- "Whether the income chargeable to tax was correctly computed under the provisions of the law ?" The question as formulated is very general. The question is rightly set out in the award of the Income-tax Appellate Tribunal, Hyderabad Bench, in the following words :- "Whether the assessee is entitled to a set off of the loss in business wholly against its income which is taxable or whether that loss is to be wholly set off against both taxed or tax-free income."
(2.) The summary given in the assessment order is as follows :- mah.b.335_061205.htm
(3.) The contention of Sri Ramamohan Rao, the learned Advocate for the assessee, is that the loss from business of Rs. 6,383 ought to be set off under section 24 (1) of the Indian Income-tax Act as against the taxable income of Rs. 7,677 and not as against the income from the tax-free securities of Rs. 24,735 or as against the dividends from the co-operative institutions Rs. 9,750 which are exempt under section 14 (2) of the Act. In order to appreciate the contention, it is necessary to refer to the terms of section 24 (1) which runs in the following terms:- "Where any assessee sustains a loss of profits or gains 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.";