SABYASACHI MUKHARJI, J.

( 1 ) THIS reference under Section 256 (1) of the I. T. Act, 1961, poses before us the following question ;" Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that by virtue of the provisions of Section 10 (27) of the Income-tax Act, 1961, the losses on account of breeding of horses and pigs amounting to Rs. 74,065 and Rs. 19,918 respectively are not admissible deductions in computing the total income ?"

( 2 ) THE reference relates to the assessment year 1965-66. The assessee, M/s. Royal Calcutta Turf Club, claimed a loss of Rs. 74,065 in Broodmares Account and Rs. 19,918 in Pig Account. The ITO, however, did not allow these losses because according to him the incomes from these two heads were exempt under Section 10 (27) of the I. T. Act, 1961. It may be instructive to refer to the fact how the ITO had dealt with this aspect in the assessment order. In the assessment year dealing with the computation of business he has added certain amount and one of the additions made by him was as follows : rs. "loss claimed in Brood-mares Account disallowed in view of section 10 (27): of the Act, 1961, as inserted by Act 5 of 1964 74,065 and the other head was as follows : "loss claimed in Pig a/c. disallowed in view of section 10 (27) of the Act as instituted by Act 5 of 1964 19,918"

( 3 ) HE thus arrived at the total income of Rs. 8,96,232 after taking into consideration the business income of Rs. 5,79,577 and other income.

( 4 ) THE assessee, being aggrieved, went up in appeal before the AAC. The AAC after examining all the facts and circumstances of the case came to the conclusion that since the income derived from the business of livestock breeding, poultry and dairy farming was exempt, it was quite natural that the loss should not also be allowed to be set off against the other income. He, therefore, upheld the order of the ITO.

( 5 ) THERE was a further appeal before the Tribunal. The Tribunal examined the whole position and referred to certain decisions. The Tribunal also referred to several rival contentions and observed, inter alia, as follows :" We have considered the rival submissions and are of the opinion that the arguments of the departmental representative are well founded. We do not find ourselves in agreement with the arguments advanced by the learned counsel for the assessee. There is no doubt that the assessee has got a right to have the loss allowed but this has got to be within the legally imposed limits under the I. T; Act. The I. T, Act nowhere provides that the loss from breeding of livestock will be allowed in the computation of income under other heads. There is also no doubt that the statute or any section thereof will be construed in such a way that in case of doubt the benefit will go to the taxpayer. Sections 70 to 80 of the I. T, Act, 1961, also do not provide that all the losses will be allowed whatever may be the circumstances. The language of Section 10 (27) is very clear and there is no room for any ambiguity whatsoever. Further, the authorities cited by the learned representative of the assessee are not applicable to the facts and circumstances of the case. The most appropriate authority is of the Patna High Court in Dalmia fain and Co. Ltd. v. CIT [1967] 65 ITR 408. The facts of this case are that a private limited company borrowed certain sum of money for the construction of a house which was begun in April, 1950, and completed in April, 1952. The company paid interest of Rs. 79,265 on capital borrowed by it. The rent received was only Rs. 12,000 after deducting the statutory repairs and interest. There was a loss as the construction of the building was begun and completed between January 1st, 1946, and March 31st, 1956, the income therefrom was not chargeable for a period of two years from the date of completion under Section 4 (3) (xii) of the Indian I. T. Act, 1922. The assessee set off the loss against other income. On these fa

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