Carry-forward business loss depends on continued same business activity, not identical partnership constitution, allowing set-off of earlier loss.

For carry-forward and set-off of business loss, the decisive inquiry is whether the assessee continued the same business activity in the relevant assessment year, not whether the identical firm or partnership constitution survived. A partnership is only the mode through which the business is carried on, so dissolution of the earlier firm did not extinguish the partner's entitlement to the unabsorbed loss where the same line of business was continued through another partnership. The carried-forward loss was therefore available for set-off against later profits, and the claim was allowed.

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Issues: Whether the assessee could carry forward and set off the unabsorbed loss sustained in a dissolved partnership against profits earned in the assessment year 1956-57 from the same line of business carried on in another partnership.

Analysis: The governing provision required that the loss be sustained in a business and that the same business be continued by the assessee in the relevant assessment year. The decisive question was not whether the same firm or the same set of partners continued, but whether the assessee continued the same business activity. The term "business" was treated as a continuous systematic course of activity, and the constitution of the partnership through which it was carried on was regarded only as the mode of carrying on that business. The loss belonged to the individual partner for purposes of set-off and was not destroyed merely because the earlier firm had been dissolved, so long as the assessee continued the same business in another partnership during the subsequent year.

Conclusion: The assessee was entitled to set off the carried-forward loss against the later profits, and the claim was allowed in his favour.

Ratio Decidendi: For purposes of carry-forward and set-off of business loss, the relevant inquiry is whether the assessee continued the same business activity in the assessment year, not whether the identical firm or partnership constitution survived.

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