Carry forward of business loss requires continuity of the same business; a fresh venture cannot absorb earlier losses.

Carried forward business loss under section 24(2) is available only if the business in which the loss arose continues to be carried on in the relevant year. Where the original business had been discontinued, the assessee had retired from the partnership, and the later activity was a fresh joint venture rather than a continuation of the earlier undertaking, the statutory condition of continuity was not satisfied. On those facts, the earlier loss could not be set off against profits of the later venture.

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Issues: Whether loss sustained in an earlier business could be carried forward and set off under section 24(2) when the assessee had discontinued that business for intervening years and later entered into a fresh joint venture with his brother.

Analysis: The carried forward loss under section 24(2) is available only where the business, profession or vocation in which the loss was originally sustained continues to be carried on by the assessee in the relevant year. The provision forms part of a scheme under which unabsorbed business loss may be carried forward from year to year, but the statutory concession is conditional upon continuity of the same business without interruption. A business that has been discontinued and later restarted, or replaced by a different venture, does not satisfy that condition. On the facts found, the assessee had retired from the earlier partnership business, that business was thereafter carried on by his brother alone, and there was no finding that the later joint venture was a continuation of the earlier business.

Conclusion: The assessee was not entitled to set off the earlier business losses against the profits of the later joint venture.

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