- (1.) This reference under Section 63(1) of the Bengal Agricultural Income-tax Act, 1944, has been made at the instance of the Commissioner, Agricultural Income-tax, West Bengal. In he proceedings for the assessment year 1949-50, it was found that in the previous year the Assessee Nuddea Farms Ltd., had sustained a loss of Rs. 29,237 under the head "agricultural income from 'agriculture" and as he had no income under the head "agricultural income from rent or revenue" the Agricultural Income-tax Officer computed the Assessee's agricultural income in the previous year at a loss of Rs. 29,237 and directed that the loss be carried forward to the following year. In the proceeding's lor the assessment year 1950-51 it was found that in the corresponding previous year the Assessee had an income of Rs. 12,842 under the head "agricultural income from agriculture" and had no income under the other head and accordingly the Assessee's agricultural income in the corresponding previous year was computed to he Rs. 12,842. The Assessee claimed to set off against this income the loss of Rs. 29,237 which had been directed to be carried forward by the preceding order of assessment. This claim of set off was disallowed by the Agricultural Income-tax Officer as also on appeal by the Assistant Commissioner, Agricultural Income-tax, but on further appeal the Appellate Tribunal allowed the claim.
(2.) On the application of the Commissioner, Agricultural Income-tax, the Tribunal has referred the following question to this Court: Whether in the facts and circumstances of the case the loss of Rs. 29,237 sustained by the Assessee in the previous year for the assessment for the year ending on the 31st March 1950, under the head 'agricultural income from agriculture' the Assessee having no income under the other head, viz., 'agricultural income from rent or revenue' in the sad previous year, could be deemed to be 'a loss' sustained by the Assessee in that year within the meaning of Section 26(2) of the Bengal Agricultural Income-tax Act, 1944, and whether under Section 26(2) such loss could be carried forward to the following year and set off against the sum on which Agricultural Income-tax was computed to be payable by the Assessee for the following year.
(3.) The answer to the question referred depends upon the true construction of Section 26 of the Bengal Agricultural Income-tax Act. That section reads as follows: 26. (1) Where in any year under either head of agricultural income specified in Section 5 it is computed that the sum on which agricultural income-tax is payable by the Assessee is a negative quantity the Assessee shall be deemed to have sustained a loss under that head to that extent and such loss shall be set off against the sum computed under the other head of agricultural income as that on which agricultural income-tax is payable in the same year. (2) Where the total sum computed under both heads of agricultural income as that on which agricultural income-tax is payable by an Assessee in any year, being a previous year not earlier than the previous year for the assessment for the year ending on the 31st day of March, 1945, is a negative quantity, the Assessee shall be deemed to have sustained a loss to that extent in that year, and such loss shall be carred forward to the following year and set off against the sum on which agricultural income-tax is computed to be payable in such year, and if such loss cannot be wholly set off in such year the amount of such loss not so set off shall be carried forward in the same manner to the next following year and so on, but no amount of such loss shall be carried forward for more than six successive years.;