Same business test for loss set-off turns on unity, control and interdependence; distinct ventures cannot be netted against each other.

Two activities constitute the same business only if there is interconnection, interlacing, interdependence or unity of control, organisation, staff, capital and accounts. Applying that test, the earlier proprietary activity of supplying stones and building materials to Government and the later partnership business of constructing Government buildings were held to be distinct ventures. The differences in ownership form, business names, separate accounts, and absence of common organisation or employees showed no operational identity, and common use of funds alone was insufficient. A loss from the extinct earlier business was therefore treated as a trading loss of a discontinued business and not available for set-off against income from the later business.

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Issues: Whether the loss of Rs. 19,783 from the earlier contracting activity could be set off against the assessee's income from the later partnership business, which depended on whether the two activities constituted the same business.

Analysis: The relevant test is whether there is any interconnection, interlacing, interdependence, or unity between the two activities, having regard to factors such as common control, common organisation, common staff, common capital, common books, and the nature of the transactions. On the facts, the earlier business of supplying stones and building materials to the Government was materially different from the later business of constructing Government buildings under contracts. The earlier business was carried on by the assessee as a sole proprietor, while the later activity was carried on by a partnership. The names of the businesses differed, the accounts were separate, and there was no evidence of common organisation or employees. Even if the same funds were used, that circumstance alone was insufficient where the businesses were not simultaneously conducted.

Conclusion: The two activities were distinct businesses, the earlier business had become extinct, and the loss was a trading loss of an extinct business not allowable as a set-off in the assessment years under reference.

Ratio Decidendi: Whether two ventures constitute the same business depends on a factual inquiry into their unity, interconnection, and interdependence; absence of common organisation, control, and operational identity supports a finding that they are distinct businesses.

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