Same business test under income tax law required fuller facts on inter-connection and common management

A reference concerning whether a share-dealing business and a manufacturing business constituted the same business under the Income-tax Act, 1922 was found incomplete because it omitted the material facts needed to apply the statutory test. The existing statement of case did not adequately address inter-connection, inter-lacing, inter-dependence, common management, business organisation, administration, fund, or place of business. The question was therefore too restricted to permit a proper answer and had to be reframed on the correct statutory basis. A supplementary statement of case was required, and the Tribunal was directed to submit it on the existing record without fresh evidence.

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Issues: Whether the reference was incomplete and required a fresh statement of case on the correct question as to whether the share-dealing business and the manufacturing business constituted the same business within the meaning of the Income-tax Act, 1922.

Analysis: The statement of the case did not set out the material facts and evidence bearing on the existence of inter-connection, inter-lacing, inter-dependence, common management, common business organisation, common administration, common fund, and common place of business between the two lines of activity. The question originally framed was too restricted to permit a proper answer, so the issue had to be reframed in terms of the statutory test governing whether two businesses are the same business.

Conclusion: The matter required a supplementary statement of the case on the amended question, and the Tribunal was directed to submit it without taking fresh evidence.

Final Conclusion: The proceeding was sent back for further statement of facts so that the reframed question could be answered on the existing record.

Ratio Decidendi: Whether two lines of business are the same business depends on their inter-connection, inter-lacing, inter-dependence, and unity as shown by common management, organisation, administration, fund, and place of business.

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