Same business test allows share-dealing losses to be carried forward where activities show unity of organisation.

For section 24(2) of the Income-tax Act, 1922, the decisive test is whether two activities show inter-connection, inter-lacing, interdependence and unity of business organisation. Common management, employees, administration, fund and place of business are material indicators of that unity. On the stated facts, share dealings and other trading activities were carried on under common management and infrastructure, so they formed one integrated business. The loss from share dealings was therefore capable of being carried forward and set off against profits from the other business activities, and the referred question was answered in the affirmative in favour of the assessee.

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Issues: Whether losses from share dealings could be carried forward and set off against profits from other business activities as arising from the same business within section 24(2) of the Income-tax Act, 1922.

Analysis: The relevant test for determining whether two lines of activity constitute the same business is whether there is inter-connection, inter-lacing, interdependence and unity embracing them. Common management, common business organisation, common administration, common fund and a common place of business are material indicators of such unity. Applying that test, the company's share dealings and its other trading activities were carried on under a common management, with common employees, common administration, a common fund and a common place of business, and therefore formed one integrated business.

Conclusion: The share business and the other business activities constituted the same business within section 24(2) of the Income-tax Act, 1922, and the loss was allowable to be carried forward and set off; the answer to the referred question was in the affirmative, in favour of the assessee.

Ratio Decidendi: For the purpose of section 24(2) of the Income-tax Act, 1922, the decisive test is not merely the nature of the businesses, but whether they exhibit inter-connection, inter-lacing, interdependence and unity of business organisation.

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