INDORE MALWA UNITED MILLS LTD vs. THE COMMISSIONER OF INCOME-TAX(CENTRAL) BOMBAY

CIVIL APPEAL No. 149/1961Supreme Court1962 INSC 6319 February 1962Bench: 3 JudgesAuthor: S.K. DAS, M. HIDAYATULLAH, J.C. SHAH14 pages
AI SummaryDismissed

What were the facts?

The assessee, Indore Malwa United Mills Ltd., manufactured and sold textile goods. Its mills were in Indore, an Indian State with its own tax rules. Sales occurred both inside and outside British India. For assessment year 1949-50, the assessee was treated as a non-resident. Indore became part of taxable territories for assessment years 1950-51 and 1951-52, and the assessee was deemed resident and ordinarily resident. The assessee claimed a set-off of its entire business loss of Rs. 5,19,590/- from 1948-49 against profits in subsequent assessment years. The High Court ruled against the assessee, and the matter was appealed to the Supreme Court.

What did the Supreme Court hold?

The Supreme Court held that the High Court correctly answered the question. Reading Section 24 in conjunction with Sections 4(1)(a) and 14(2)(c), it is clear that Section 24(1) refers to taxable profits or gains, meaning those assessable in British India or the taxable territories. It does not encompass income accruing or arising outside these territories that was not liable to assessment for non-residents. The Court further held that for determining the nature of the losses, the relevant year was 1948-49, the year in which the losses occurred. Consequently, for the application of Section 24(2), the losses must be of a nature that could have been set off under Section 24(1). The Court agreed with the High Court that the loss of Rs. 5,19,590/- was not such a loss as could be set off under either Section 24(1) or 24(2). The appeals were dismissed.

What were the issues?

1. Whether, under Section 24 of the Indian Income-tax Act, 1922, the assessee, as a non-resident, was entitled to set off its entire business loss of Rs. 5,19,590/- incurred in assessment year 1948-49 against profits in subsequent assessment years. Assessee's contentions: The assessee argued that the business was a single entity and, under Section 24, it was entitled to set off the losses sustained in 1948-49. It further contended that Section 24(2) applied to any assessee, including non-residents, and that after Indore became part of taxable territories in 1950-51, there was no impediment to carrying forward losses. Revenue's contentions: The revenue argued that Section 24(1) refers to taxable profits or gains, not income accruing or arising outside taxable territories that were not liable to assessment for non-residents. Therefore, losses from such income could not be set off. The revenue also contended that for the application of Section 24(2), losses must be such as could have been set off under Section 24(1).

Which sections of the Income-tax Act were involved?

Section 24,Section 4(1)(a),Section 14(2)(c),Section 66A

AI-generated summary — verify with the full judgment below

JY62. M /s~ SooraJmull .Nagai mull v. . Commi.s.fiontr pf lncome-ta.t, Calcutt..i Shah J. 1962 FebruaT)' 191 ' '

SlO SUPREME COURT REPORTS (1962] SUPP. ,, . the Oovrt or Tribunal is founded.

The Legi.slature has expressly entrusted th~ powei:- of appraisal of f!Vidence to the T.axing authorities, and the decision of those authorities would orqinarily be regarded as final.

This is not to say that in a proper case this Court m;i.y not, in the interest of justice. when occasion demands it, review the evidence. "Tli:e" power of this Court unde~ Art. 136 is not restricted; but it is only in very exceptional cases that this Court enters upon appraisal of evidence in appeals filed with special leave and this case does not dis- close any such exceptional circumstances. '

On this ground the appeals Nos. 238 and 239 of 1961 filed by the assessees and the Commissioner against the order of the Tribunal must fail and are dismissed with costs. One hearing fee.

Appeals dismissed. INDORE MALWA UNITED MILLS LTD. v. THE COMMISSIONER OF INCOME-TAX (CEN'J."'RAL) BOMBAY , ... (S. K. DAS, M. HIDAYATULLAH and J.C. SHAH, JJ.) 1 Income Tax-Propeedings under s. 24 of th

The order continues below.

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