The contention on behalf of the income tax authorities was (i) that under the first proviso to section 32(1) of the Travancore Income tax Act losses incurred in places out I side the State of Travancore cannot be set off against profits made in that State, (2) that though profits and losses in the State arising under the same head could be set off, the proviso, aforesaid, affected not only the generality of the main enactment but also introduced an addendum that where the profits of the business arose in the State and the losses under the head business were sustained outside that State, those losses could not by virtue of the proviso be deducted from profits made in the State,(3) that the proviso applied only to the bead " business in the two respective territories, as the words used therein are where the loss sustained is a loss of profits or gains " andthe word " income " is not mentioned therein, and (4) that the word " business " in section 13 of the Travancore Act corresponding to section 10 of the Indian Act, must mean business in Travancore State under section 13 Of that Act and " business in British India " under the Indian Act, because before 1939 income was not chargeable under the two Acts, unless it was received or accrued in Travancore State or British India, as the case may be, and profits and gains of business in territories outside Travancore or in an Indian State were exempted from payment of income tax in Travancore State or in British India, as the case may be.