Unity of business test for share dealings and managing agency allowed carry-forward and set-off of losses.

Whether a managing agency and dealings in a company's shares form the same business for carry-forward and set-off depends on factual unity: the ventures must be interconnected, interlaced, interdependent and so dovetailed as to constitute one business. Common ownership, common management or a single set of accounts are not decisive by themselves, but surrounding circumstances may establish unity of business. On the facts, the shares were acquired with the managing agency, part of the acquisition was to secure that agency, most shares related to the managed company, and the activities were combined in practice. The activities were therefore treated as one business, and the set-off was available.

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Issues: Whether the managing agency of Meyer Mills Ltd. and dealing in its shares constituted one and the same business for the purpose of carry-forward and set-off of unabsorbed losses under section 24(2) of the Income-tax Act, 1922.

Analysis: The governing test is whether the ventures are interconnected, interlaced, interdependent, and so dovetailed as to form a single business. Common ownership, common management, or a single set of accounts are not by themselves decisive, but the surrounding circumstances may show unity of business. Here, the shares were acquired simultaneously with the managing agency, one object of acquisition was to secure that agency, most of the shares related to the managed company, and the activities were in fact combined. The fact that either activity could theoretically be carried on separately was not conclusive against unity on the facts found.

Conclusion: The two activities constituted one business, and the assessee was entitled to the claimed set-off.

Ratio Decidendi: Whether separate ventures constitute the same business depends on interconnection, interlacing, interdependence, and unity of control or dovetailing, assessed on the facts of the case.

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