“In support of this view the appellants sought the aid of proviso (ii) to Section 20 (2) (b) of the Income Tax Act. Section 20 (2) (b) reads:- “There shall be deducted:- (b) the amount of a loss which the Board is satisfied has been incurred by him in any such trade, business, profession or vocation during any year preceding the year of assessment which has not been allowed against his assessable income of a preceding year: Provided that-” and proviso (ii) reads:- “a deduction under this paragraph for any year of assessment shall not exceed the amount, if any, of the assessable income, included in the total income for that year of assessment, from the trade, business, profession or vocation in which the loss was incurred and shall be made as far as possible from such amount of such assessable income of the first year of assessment after that in which the loss was incurred, and, so far as it cannot be so made, then from such amount of such assessable income of the next year of assessment, and so on :” It appears to me that the proviso to subsection 20 (2) (b) was not considered at all by the learned Chief Justice in his judgment. If he had done so, he might have arrived at a different conclusion in his judgment. He applied paragraph (a) of section 20 (2) interpreting “a loss incurred by him (the taxpayer) during the year of assessment” as “the loss incurred during the year preceding the year of assessment in cases in which section 18 (1) applies” contrary to the language of paragraph (a). It seems to me that the case is governed, not by subsection (a), but by subsection (b), and the correct application of paragraph (b) of the subsection is that in the year of assessment, a deduction for loss in trade or business in the preceding year shall not exceed the amount of the assessable income in respect of the trade or business in which the loss had been incurred. Thus, if the amount of assessable income of the trade included in the gross income is NIL, no deduction will be made, and the amount of loss will be carried forward until profits are shown in the particular trade or business.”
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