Same business test under income tax law turns on real interdependence; textile manufacture and share dealing were treated as separate activities.

For carry forward and set-off of loss under section 24(2) of the Income-tax Act, 1922, the relevant test is whether separate activities are so inter-connected, inter-laced, inter-dependent or dovetailed that they amount to one organically integrated business. Common ownership, capital, premises, staff or accounts are not conclusive by themselves; where the activities are prima facie distinct, the assessee must establish the necessary integration on the totality of facts. Applying that approach, textile manufacture and share dealing were treated as distinct businesses, so the share-dealing loss could not be set off against textile profits.

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Issues: Whether the assessee's textile manufacturing business and share dealing business constituted the same business for the purpose of carry forward and set-off of loss under section 24(2) of the Income-tax Act, 1922.

Analysis: The governing test is whether there is real inter-connection, inter-lacing, inter-dependence, or dovetailing between the activities, judged on the cumulative effect of all the relevant facts. Common ownership, common capital, common premises, common staff, and common accounts are not by themselves conclusive. Where the two activities are prima facie distinct, the onus lies on the assessee to show that they form one organically integrated business. The question is ultimately one of mixed law and fact, and the tribunal's conclusion will stand if it has applied the correct tests to the proved facts without misdirection.

Conclusion: The textile manufacturing business and the share dealing business did not constitute the same business. The loss in share dealings could not be set off against the profits of textile manufacture, and the answer to the referred question was in the affirmative against the assessee.

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