Judgement

SUBBA RAO, J.: These appeals by special leave raise the question of construction of Section 24 (2) of the Indian Income-tax Act, 1922, hereinafter called the Act.

2. The material facts may briefly be stated. The Cocanada Bank Ltd., Kakinada, hereinafter called the assessee, is a private limited company carrying on banking business with its head office at Kakinada and a branch at Dayal Bagh. The assessee s sources of income are banking business and interest from Government securities. For the assessment year 1949-50 its income was assessed as follows: 48

Interest on securities Rs. 84,880

Other banking activities Rs. 64,400 (loss)

Net loss Rs. 55,912

The following tabular form shows at a glance the factual position in regard to the income of the assessee under different heads during the said three years.

Year of assessment Interest on securities Business income or loss (as finally decided by the A.A.C.) Total

(1) (2) (3) (4)

Rs. Rs. Rs.

1. 1950-51 5,191 886 6,077

2. 1951-52 2,174 1,177 3,351

3. 1952-53 1,885 9,121 11,006

For the three succeeding years the department showed the income under the said two separate heads but allowed the said loss to be set off against the income u