THE COMMISSIONER OF INCOME-TAXNEW DELHI vs M/s. CHUNI LAL MOONGA RAM

The Supreme Court ruled that losses incurred by the assessee in transactions outside the taxable territories, specifically in Bhatinda, cannot be deducted when computing income for Excess Profits Tax under Section 5 of the Excess Profits Tax Act, 1940. The court emphasized that the third proviso to Section 5 excludes losses from non-taxable territories from being considered in the taxable income. Consequently, the appeal was dismissed, affirming the lower court's decision that such losses are not allowable.