ANSARI, J. - The assessee in this reference is a partner in the firm of S. N. Lakshmana Iyer & Co., and carries on his business at Mattancherry, Cochin. From October 1, 1949, another business had been started under the name of S. V. Ramaswami & Co. The assessee has furnished for the assessment year 1952-53 returns showing a net loss of Rs. 4,223-2-0. This has resulted, because the losses claimed to have been incurred in the business of Ramaswami & Co. have been set off against the profits that had been earned through S. N. Lakshmana Iyer & Co. The total of such losses is stated to be Rs. 50,287-4-0 and the Income-tax Officer has not allowed the set-off on the ground that the business of Ramaswami & Co. was not carried on by the assessee, but by his son. The officer has further held that the losses having been ascertained on December 31, 1950, when the account for the business of Ramaswami & Co. had been made, they were not according to section 2(11)(c) of the Income-tax Act sustained in the previous year to the assessment year, and could not be, therefore, set off against the profits earned during such a year. The Appellate Assistant Commissioner, Trivandrum, has sustained both the grounds of the order. The Appellate Tribunal has, however, dismissed the appeal on one ground and the relevant part of its order reads thus :
'If Ramaswami & Co. is a new business that the assessee has started as claimed, its first previous year under the Act must be up to 31st March, 1950, in respect of the assessment year 1950-51 and its next up to December 31, 1950, the date of closure, in respect of the next assessment year 1951-52. In this view the entire loss of Rs. 50,287 claimed should have been claimed between 1950-51 and 1951-52. The claim of the loss against the assessment year 1952-53 presently under appeal is, therefore, untenable.'
The application to refer a question to this court was dismissed by the Tribunal, but it has been directed under section 66(2) of the Income-tax Act to state the following question :
'Whether on the facts and in the circumstances of the case, in the assessment upon the assessee for the assessment year 1952-53 the loss of Rs. 50,287-4-0 sustained in the business styled as S. V. Ramaswami & Co. is liable to be considered and set off against the profits of the assessee relating to the said year ?'
The counsel for the assessee has argued that his client had shown his previous year for the assessment year 1952-53 as having ended on August 16, 1951; the year had, therefore, begun from August 15, 1950, and, therefore, the assessee was entitled to set off the losses that had been incurred on December 31, 1950, against the profits he had earned in the previous year from his other business. In other words, his argument is that the losses were incurred within the year previous to the assessment year, and the taxing authorities have erred in holding that they could be adjusted only during the earlier years. In support of the argument the counsel has relied on Commissioner of Income-tax v. Abdul Rahman, where the assessee was held not guilty of having secreted his income that had accrued to him as a partner in the year previous to the assessment. The learned judges further held that as the income could be shown only after it has accrued that could be done only in the subsequent year. The counsel has further relied on Gangadas Sarda v. Commissioner of Income-tax and Commissioner of Income-tax v. Meghu Sao jhandhu Sao. The first of the two cases is not of much assistance, as there the Tribunal had refused to entertain a fresh question of law arising under section 2(11)(c) of the Income-tax Act and the learned judges held that it ought to have decided the question. While so doing they relied on Commissioner of Income-tax v. Meghu Sao Jhandhu Sao, and therefore the latter case also supports the same proposition. It is clear that section 2(11)(c) of the Income-tax Act cannot be of any help to the assessee, for the previous year under it could be claimed only where the accounts of the business be made up for 12 months, and in the case before us the accounts of Ramaswami & Co., which was started on October 1, 1949, were settled for the first time on December 31, 1950. Taking as the previous year the period ending March 31, 1950, would also be of no assistance as that would not be the previous year to the assessment year before us; nor would the position be improved by treating December 31, 1950, as the year previous to the next assessment year, for the losses would then be available only for the assessment year for 1951-52. In these circumstances the counsel for the Department has rightly argued that no part of section 2(11)(c) of the Income-tax Act can be of assistance to the assessee. He has also relied on General Commercial Corporation Ltd., In re, wherein it has been held that closing accounts for a period of over 12 months is not covered by the clause. The counsel for the assessee has, however, argued that, through his clients case be not covered by the aforesaid clause, he is not precluded from adjusting the losses he had incurred towards the profits that had accrued during the previous year defined by section 2(11)(a) of the Act. The argument overlooks the legal position that the assessee having been allowed several returns for several businesses, previous years for the different assessment years are different and losses of one such year cannot be brought in the other previous years unless such a set-off is allowed under the Act. The argument further overlooks that though the decision in Commissioner of Income-tax v. Abdul Rahman has disapproved the practice of income being calculated according to the separate accounting year where the assessee be having several businesses; the Legislature by subsequent amendment of section 2(11) of the Income-tax Act has reaffirmed the practice. Therefore, adjusting the loss of one such year against the gains of another year can only be allowed where such adjustment is permissible under the Act. Now it cannot be denied that there are four ways in which the assessee may set off his losses against his profits. Such an adjustment may take place between the losses and profits arising from the same source in the same year. Again the losses can be set off against the profits under the same head, though the sources of income be several. Such computing is permissible, however, only where the several sources of income be in the same year. Yet again the losses may be set off against profits under another head of income of the same year, and this is allowed by section 24(1) of the Income-tax Act. All the aforesaid three ways are not available to the assessee before us, because the losses in the previous year to the assessment year for the new business are not in the previous year to the assessment year for the old business; and the losses are, therefore, not in the year the profits have accrued. Section 24(2) of the Income-tax Act allows losses to be carried forward; but then that must be in the business, which is carried on and the assessees new business in the previous year to the assessment year before us is not claimed to be of this nature. We, therefore, hold the view taken by the Appellate Tribunal to be correct.
The counsel for the assessee next argued that he was entitled to the benefits of the Press Note published by the Income-tax Department on July 15, 1952. The aforesaid notification had stated that a new sub-section had been added to section 22 of the Income-tax Act; that it enables the assessee to carry forward the losses where that can be done under section 24(2) of the Act; and that as the amendment to the Act had been inn operation for a very short time before returns could be filed, persons who wish to furnish such returns should be allowed to do so till December. We fail to understand how this notification can help the assessee, as he cannot take advantage of section 24(2). The answer to the question is therefore in the negative. Let the answer be sent to the Department and the assessee pay the costs, which we fix at Rs. 100.
Question answered in the negative.