Section 32(1) of the Travancore Income tax Act, which corresponds to section 24(1) of the Indian Income tax Act, 1922, provided : " Where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in Section 9 [section 6 of the Indian Act he shall be entitled to have the amount of loss set off against this income, profits or gains under any other head in that year : Provided that where the loss sustained is a loss of profits or gains which would but for the loss have accrued or arisen within British India or in an Indian State and would under the provisions of clause (c) of sub section (2) of Section 18 corresponding to section 14 Of the Indian Act] have been exempted from tax, such loss shall not be set off except against profits or gains accruing or arising within British India or in an Indian State and exempt from tax under the said provisions ".