Same business test denies loss carry-forward where coal mining and later contract work lacked continuity and interdependence.

Carry-forward and set-off of losses under Section 24(2) of the Income-tax Act, 1922 depended on whether the business in which the loss arose was still being carried on in the relevant year. The test was whether the two ventures were so interlaced, dovetailed and interconnected as to form one business, considering unity of control, management, activities, staff, capital and the effect of closure of one venture on the other. On the facts, the coal mining business at Mundulpoor had closed before the coal-raising contract business began, and there was no factual continuity or interdependence between them. They were therefore different businesses, and the earlier loss could not be carried forward and set off against the later business.

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Issues: Whether the assessee's coal mining business and the later coal-raising contract business constituted the same business for the purpose of carrying forward and setting off losses under Section 24(2) of the Income-tax Act, 1922.

Analysis: The statutory benefit of carry forward under Section 24(2) depended on the business in which the loss was originally sustained continuing to be carried on in the relevant year. The determining test was whether the two ventures were so interlaced, dovetailed, and interconnected as to form one business, having regard to factors such as unity of control and management, inter-relation of activities, common staff, common capital, and the effect of closure of one venture on the other. On the facts found, the coal mining business at Mundulpoor had been closed and the contract of coal raising from another colliery was commenced only afterwards. There was no prior conduct of the contract business and no factual interdependence or continuity between the two ventures.

Conclusion: The two activities constituted different businesses, so the assessee was not entitled to carry forward and set off the earlier loss against the later contract business.

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