Same business test for loss set-off turns on commercial unity, not common management or accounts.

For carry-forward and set-off of business losses, the decisive test is whether the activities are so inter-connected, inter-laced and inter-dependent that they form one commercial whole. Common ownership, finance, staff, books or premises are not enough by themselves. Applying that principle, textile manufacturing and forward dealings in commodities such as hessian, sacking, bullion and castor seeds were held to be distinct commercial activities and not one integrated business. The assessee was therefore not entitled to treat them as the same business for the purpose of section 24(2) of the Indian Income-tax Act, 1922.

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Issues: Whether the assessee's manufacturing business in yarn and cloth and its forward transactions in hessian, sacking, bullion and castor seeds constituted the same business for the purpose of carry-forward and set-off of losses under section 24(2) of the Indian Income-tax Act, 1922.

Analysis: The relevant inquiry is not whether the activities are carried on under common ownership, common finance, common staff, common books, or from the same premises, but whether their nature and conduct show such inter-connection, interlacing, inter-dependence, and unity that they form one commercial whole. The actual character of the ventures is the controlling consideration. Activities that are intrinsically different in nature do not become one business merely because they are managed together or pursued to earn profit. On the facts, the manufacture of textiles and dealings in forward transactions in commodities like hessian, sacking and castor seed were distinct commercial activities and could not be treated as one integrated business.

Conclusion: The question was answered in the negative. The assessee was not entitled to treat the two sets of activities as the same business for section 24(2).

Ratio Decidendi: For carry-forward and set-off of business losses, the decisive test is whether the competing activities are so interconnected and interdependent as to constitute one commercial unit; common management, finance, staff, or accounts by themselves are insufficient.

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