These two appeals filed by same assessee are heard together and disposed of by this common order for sake of convenience. 2. We first take up Appeal No. 1367 (Cal.) of 1983, which relates to assessment year 1978-79. assessee is limited company. It derives income from business and other sources. During year under consideration, it had some long-term capital loss as well as short-term capital loss. short-term capital loss amounted to Rs. 8,10,000. In assessment order, ITO computed business income before depreciation at Rs. 8,21,405. Then, he allowed depreciation for year amounting to Rs. 10,80,284. Thus, he arrived at business loss of Rs. 2,58,879. In arriving at this figure, ITO had already set off short-term capital loss of Rs. 8,10,000 against business income before arriving at aforesaid business income of Rs. 8,21,405. Then ITO found that assessee was entitled to investment allowance of Rs. 4,59,554 under section 32A(3) of Income-tax Act, 1961 ('the Act'). As income of assessee from business after adjusting short-term capital loss but after allowing investment allowance came to loss figure, ITO observed that investment allowance due to assessee for year under consideration shall be carried forward in accordance with provisions of section 32A(3). He completed assessment, accordingly. It may be stated that ITO separately assessed long-term capital gains at Rs. 54 and net dividend income, after allowing relief under section 80K of Act at Rs. 2,641, as neither of these two items could be set off against business loss. However dispute in this appeal does not relate to assessment of long-term capital gains or dividend income at all. important point to note in assessment made by ITO is that he set off short-term capital loss against business income and considered balance so arrived at for purpose of allowing of carrying forward of investment allowance under section 32A(3). 3. Subsequently, Commissioner scrutinised records and came to hold view that ITO made mistake in assessment order. According to Commissioner, investment allowance should have been first allowed from business income before setting off short-term capital loss. If that is done then what would be carried forward to future year is short-term capital loss, which could not be set off after allowing investment allowance. On other hand, as per assessment made by ITO, short-term capital loss has already been set off during year under consideration and what is to be carried forward is unabsorbed investment allowance. significance of this difference is that while brought forward investment allowance can be set off against future business income, brought forward short-term capital loss can be set off only against future short-term capital gains and not against future business income because of provisions of section 74 of Act. Commissioner issued show-cause notice to assessee and after overruling objection of assessee passed order under section 263 of Act dated 3-1-1983, directing ITO to set off investment allowance and carry forward short-term capital loss to future years. 4. assessee is in appeal before us against aforesaid order dated 3- 1-1983 under section 263 relating to assessment year 1978-79. Sri A.K. Jhunjhunwalla, learned representative for assessee, urged before us that Commissioner erred in his decision. He took us through provisions of section 32A(3), which reads as below: " Where total income of assessee assessable for assessment year relevant to previous year in which ship or aircraft was acquired or machinery or plant was installed, or, as case may be, immediately succeeding previous year (the total income for this purpose being computed after deduction of allowances under section 33 and section 33A, but without making any deduction under sub-section (1) of this section or any deduction under Chapter VI-A) is nil or is less than full amount of investment allowance,-- " Then he referred to definition of 'total income' as contained in section 2(45) of Act. Here, 'total income' has been defined to be total amount of income referred to in section 5 of Act, computed in manner laid down in this Act. He urged that for purpose of section 32A(3), one has first to compute 'total income' as defined under section 2(45), that is to say in accordance with provisions of Act. This provision included section 71(3) of Act, which states that short-term capital loss has to be set off against business income of same year. If that is done then there is no positive business income left, against which investment allowance could be allowed. Hence, investment allowance had to be carried forward under section 32A(3) as was done by ITO. In this connection, he pointed out that in section 32(2), which deals with carry forward of depreciation, Legislature has used words 'profits or gains' and not words 'total income'. His point was that total income in section 32A(3) must not mean total income as defined in section 2(45) but as modified by language used in section 32A(3) itself. If that is done, then there was no mistake in order of assessment passed by ITO. So, he contended that order under section 263 passed by Commissioner deserved to be cancelled. 6. Shri K. Subba Rao, learned representative for department, on other hand, supported order of Commissioner. He stated that Commissioner has based his order on provisions of section 74 of Act which clearly states that short-term capital gain has to be carried forward to future years. Coming to section 32A(3), he contended that total income for purpose of this section has been defined therein and that definition has to be confined to sections dealing with computation of business income as stated by Commissioner in his order. According to him, total income for purpose of section 32A(3) cannot be extended beyond sections dealing with computation of business income. 6. We have considered contentions of both parties as well as facts on record. question that is raised in this appeal concerns meaning of words 'total income', as appearing in section 32A(3). If meaning of this phrase is to be gathered in accordance with definition given in section 2(45), then income has to be computed in accordance with provisions of Act but ignoring some sections, viz., deductions under Chapter VIA. This will give definition in section 2(45) special modification stated in this sub-section itself and this modification is confined to purpose of this sub-section. In spite of this modification, fact will remain that total income has to be computed in accordance with definition under section 2(45), viz., in accordance with provisions of Act, which, in turn, would mean after setting off short-term capital loss of this year, as provided for in mean after setting off short-term capital loss of this year, as provided for in section 71(3). This is case of assessee. On other hand, if meaning of phrase 'total income' appearing in section 32A(3) is to be understood without reference to definition in section 2(45), then total income would remain undefined for purpose of section 32A(3). It is that undefined total income which has to be further modified by express language of section 32A(3). This is case of learned Commissioner. In our opinion, reasonable way to understand meaning of words, 'total income' appearing in section 32A(3) is to follow method of interpretation that is workable vide decision in CIT v. S. Teja Singh [1959] 35 ITR 408 (SC). Act has already defined term 'total income' in section 2(45). This phrase will connote that meaning everywhere in Act unless context otherwise requires. only modification introduced in section 32A(3) is that deductions under Chapter VIA are to be ignored. Subject to that modification, context does not indicate any other interpretation. Hence, we are inclined to hold that words 'total income' in section 32A(3) have to be understood in accordance with definition given in section 2(45) so that order of ITO was quite correct and there was no scope for any interference by order under section 263. We find force in contention raised by assessee that in section 32(2), words used are 'profits and gains' and not 'total income'. If intention were to confine portion of section 32A(3) to sections dealing with computation of business income alone, then it stands to reason that Legislature would have used words 'profits and gains' as has been done in section 32(2). We also find that section 80B(5) of Act defines 'gross total income' in terms of 'total income', wherein it has been stated that total income should be computed in accordance with provisions of this Act. words 'in accordance with provisions of this Act', were not necessary to be introduced in section 32A(3) because it was not defining new term like 'gross total income'. Section 32A(3) deals with concept already defined in section 2(45) and does not deal with new concept like 'gross total income'. Considering all facts and circumstances of case and plain language of section 32A(3), we are inclined to hold that order of Commissioner under section 263 was not called for in this case. In any case, best case for department can only be that there is doubt about meaning of words 'total income' used in section 32A(3). It is now well settled that in case of genuine doubt leading to two reasonable interpretations, one favourable to assessee has to be preferred vide decision in case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC). In this view of matter also, case of assessee, in our opinion, deserves to be upheld. 7. IT Appeal NO. 1368 (Cal.) of 1983 relates to assessment year 1979- 8 0 and is merely consequential to order dated 3-1-1983 passed by Commissioner for assessment year 1978-79. On same day, Commissioner has passed other order under section 263 for assessment year 1979-80 also as consequence. As we have held that order of Commissioner for assessment year 1978-79 is not sustainable in law, we also hold that order of Commissioner for assessment year 1979-80 is also not similarly sustainable. We, therefore, cancel both orders under section 263 passed by Commissioner for two years under consideration. 8. In result, two appeals are allowed. *** SHREE BHAWANI COTTON MILLS AND INDUSTRIES LTD. v. INCOME TAX OFFICER