Income Tax Appellate Tribunal:

Compensation got by the assessee as treasurer of the Allahabad Bank Ltd was salary
emerging from the quest for a calling or work inside the importance of segment 10 of the
Income Tax Act and the misfortune endured amid the previous year was at risk to be set
off against the assessee's pay emerging from that source in the year under thought.

High Court of Allahabad:

Compensation got by the assessee from the Allahabad Bank Ltd was salary obligated to
be burdened under segment 10 of the Income Tax Act and that the assessee could claim to
set off the misfortune figured in the evaluation year 1950-1951 against the benefits in the
resulting year.

Supreme Court of India:

Compensation got by the assessee from the Allahabad Bank Ltd must be registered under
area 10 of the Income Tax Act and loss of benefit endured in that livelihood in any year
might be conveyed forward to the following year and be set off against the benefit of the
succeeding year.

FACTS:

On 2 January 1931 Lal Manmohan Das hereinafter called the "assessee" was named
treasurer of the Allahabad Bank Ltd in admiration of certain branches, sub organizations
and pay workplaces to the extent Calcutta, Lahore, Patna, Amritsar, Banaras and
Secunderabad.

The assessee was evaluated to Income Tax as speaking to his Hindu unified family
and the pay got by the assessee under the terms of the concurrence with the Allahabad
Bank Ltd was dealt with as the salary of the Hindu unified family.

For the evaluation year 1951-1952 the benefit and misfortune record of the
assessee demonstrated Rs 73817 as receipt against which were charged outgoings added
up to Rs 39370 which included Rs 20000 being the misfortune endured by the assessee as
treasurer of the Patna branch of Allahabad Bank Ltd emerging from misappropriation of a
collaborator clerk.
 The Income Tax officer declined to permit the misfortune endured in the earlier
year to be set off against the net benefit of Rs 34445 and conveyed that measure of
benefit to charge as compensation got by the assessee as treasurer of the Allahabad Bank
Ltd.

The request of the Income Tax officer was affirmed in the claim by the Appellate
Assistant Commissioner.

The Income Tax Appellate Tribunal held that the compensation got by the assessee
as treasurer of the Allahabad Bank Ltd was pay emerging from the quest for a calling or
job inside the significance of segment 10 of the Income Tax Act and the misfortune
endured amid the previous year was at risk to be set off against the assessee's salary from
that source in the year under thought.

At the occurrence of the magistrate of Income Tax Uttar Pradesh, the case was
alluded to the High Court of Allahabad under segment 66(1) of the Income Tax Act 1922.

The High Court of Allahabad held that the compensation got by the assessee from
the Allahabad Bank Ltd was wage obligated to be exhausted under segment 10 of the
Income Tax Act and that the assessee could case to set off the misfortune figured in the
appraisal year 1950-1951 against the benefits in the ensuing year.

The Income Tax Officer advanced under the watchful eye of the Supreme Court of
India

LEGAL ISSUE:
 On delegating the assessee as treasurer of the Allahabad Bank Ltd, pay earned by
the assessee from his exercises in that capacity treasurer tumbled to be processed under
area 10, segment 7 or segment 12 of the Income Tax Act?

Whether the assessee could assert a set off the misfortune endured by him in the
former year 1950-1951 against his benefits in the year under thought (1951-1952)?

3) ARGUMENTS ADVANCED:

PETITIONER:

The Income Tax Officer announced that the misfortune processed in that year couldn't be
conveyed forward to the following year under segment 24(2) of the Income Tax Act as it
was not a business misfortune.

Whether the loss of benefits or picks up in any year might be conveyed forward to
the next year and set off against the benefits and against the same business, calling or job
under segment 24(2) of the Income Tax Act must be dictated by the Income Tax Officer
who manages the evaluation of the resulting year.

The Income Tax Officer asserted that the assessee was a hireling of the Allahabad
Bank Ltd and was not qualified for convey forward the misfortune endured in that and set
it off against the benefit in the resulting year of the same business, calling or occupation
under segment 24(2) of the Income Tax Act depending upon the cases Shivnandan
Sharma v Punjab National Bank Ltd and Piyare Lal Adishwar Lal v Commissioner Of
Income Tax as the agreements in these cases were like the agreement in the present case.

RESPONDENT:

Section 24(2) of the Income Tax Act presents a statutory right (subject to specific
conditions which are not material) upon the assessee who maintains lost benefits in any
year in any business, calling or occupation to convey forward the misfortune as it is not
set off under sub segment (1) to the next year and to set off against his benefits and picks
up if any from the same business, calling or job for that year.

A choice recorded by the Income Tax officer who registers the misfortune in the
earlier year under segment 24(3) of the Income Tax Act that the misfortune can't be set
off against the salary of the resulting year is not official on the assessee.

Receipt of compensation for holding an officer does not as a matter of course offer
ascent to a relationship of expert and worker between the holder of the workplace and the
individual who pays the compensation.

The bank has no power to control the treasurer in due execution of obligations
embraced by the treasurer under the terms of the assention. Despite the fact that the
treasurer had numerous forces like naming and rejecting staffs and obligations like safe
keeping the critical archives, securities, money and so forth as indicated by the
understanding between the treasurer and the Allahabad Bank Ltd, regardless he doesn't go
under the general supervision of the bank. The agreement was consequently one for
administration and the treasurer couldn't be known as a worker of the bank.

There is no contract contained in the understanding between the assessee and the
Allahabad Bank Ltd which either explicitly or impliedly gives upon the bank such control
and supervision over the work done by the treasurer. The Court for the situation
Dharangadhara Chemical Works Ltd v State of Saurashtra watched that there must be a
privilege of control in admiration of the way in which the work is to done. In the event
that a privilege of control is not present, the individual can't be called as a worker of the
business.

The instances of Shivnandan Sharma v Punjab National Bank Ltd and Piyare Lal
Adishwar Lal v Commissioner Of Income Tax can't be depended upon to pass a request
for this case in light of the fact that unless the terms of the agreements and the conditions
in which they are made are indistinguishable, translation of one contract can't be viewed
as an aide for deciding the expectation of the gatherings to another agreement and in both
these cases it is plainly composed and communicated in the assention that there is a
privilege to control the activities of the treasurer by the bank. However, in the present
case there is no notice of a privilege to control the exercises of the treasurer by the
Allahabad Bank in the understanding between them.

JUDGEMENT:

On a cautious thought of the contracts contained in the understanding between the

treasurer and the Allahabad Bank Ltd, the court is of the perspective that the treasurer
was not a hireling of the Allahabad Bank under the terms of the assention dated 2 January
1931, and the compensation got by him was not "pay rates" inside the significance of
segment 7 of the Income-charge Act. Yet, that is not adequate to finish up the matter for
the assessee. The advantage of area 24(2) of the Indian Income-charge Act might be
benefited of by the assessee just if the misfortune tried to be set off was endured under
the head "Benefits and picks up in any business, calling or employment". It is hard to
respect the control of the treasurer under the simply learned or manual expertise, and the
work of the treasurer under the agreement can't be so respected. Control of a treasurer is
not one of the perceived callings, nor would it be able to be said that it shares of the
character of a business or exchange. In playing out his obligations under the assention,
the assessee practiced his ability and judgment in making appropriate arrangements and
made plans for administering the work-done by the 'Staff in the Cash Department of the
Bank's Branches.

The compensation got by him was for due execution of the obligations furthermore for
the insurance against misfortune emerging to the Bank out of the demonstrations or
exclusions of the Cash and other staff of the Bank. Mulling over the way of the
obligations performed, and the commitments embraced, together with the privilege to
compensation subject to pay for misfortune emerging to the Bank from his own particular
demonstrations and exclusions or of the workers brought by him into the matter of the
Bank, the assesse might be viewed as taking after a business. The compensation should in
this way be registered under segment 10 of the Income Tax Act and loss of benefit
endured in that occupation in any year might be conveyed forward to the following year
and be set off against the benefit of the succeeding year.
The bid of the Income Tax officer under the steady gaze of the Supreme Court of India in
this way comes up short and is rejected with expenses.