Business loss set-off under income tax law covers the assessee's business as a whole, not separate branches.

For section 24(2) of the Income-tax Act, 1922, a carried-forward business loss had to be set off against profits of the assessee's business as a whole, not only against profits from the identical line of activity. The court treated "same business" as referring to the single head of business income under the Act, so different branches of activity were not to be isolated for set-off purposes. On that basis, speculation business and milling business were treated as parts of one business head, and the assessee could not deduct the milling loss without first adjusting the same-year speculation profits. The assessment was upheld.

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Issues: Whether, for the purpose of section 24(2) of the Income-tax Act, 1922, a loss brought forward from an earlier year had to be set off only against profits of the identical line of business or against profits of business as a whole.

Analysis: Section 24(2) permits carry forward of business loss for set-off against the profits and gains of the assessee from the same business, profession or vocation. The expression "same business" was held to refer to the business carried on by the assessee as a whole and not to each separate line of activity taken in isolation. Under the scheme of the Act, business is a single head of income under section 6, and section 10 requires the profits of all business activities to be assessed under that head. On that basis, speculation business and milling business were treated as one business head for the purpose of set-off.

Conclusion: The assessee was not entitled to deduct the entire milling loss without first setting off the speculation profits of the same year; the loss had to be reduced accordingly.

Final Conclusion: The reference was answered against the assessee and the assessment made by the Income-tax Officer was upheld.

Ratio Decidendi: For section 24(2), "same business" means the assessee's business as a whole under the head "business", and not separate branches or kinds of business carried on by the assessee.

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