TaxTMI 
TaxTMI 
2014 (5) TMI 153
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.... the assessee is entitled to claim of set off of past losses against the income of the current assessment year 1988-89" Brief facts of the case are that for the assessment year in dispute, the respondent assessee (herein after referred to as "the assessee") filed the return showing the loss of Rs. 2, 46, 856. 80 Naye Paise. The assessee has claimed the brought forward loss amounting to Rs. 4,49,868/-. It appears that upto the assessment year 1984-85 the assessee was running steel mill and was also deriving commission from M/s Rohtas Industries. During the assessment year 1985-86 there was no manufacturing activity and the source of income of the assessee was commission from M/s Rohtas Industries. During the assessment year 1986-87 plant and machinery of the steel mill was closed and the only source of income of the assessee was the commission from M/s International Electrical Industries, Lucknow. During the assessment year 1986-87 the assessee started a new business of Rake handling of M/s U.P. State Cement Corporation and earned commission. The assessing authority had disallowed the brought forward loss amounting to Rs. 4,49, 868/- on the ground that the carried forward loss....
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....nt to the business carried on in the earlier year in which the loss has been suffered and therefore such carried forward loss cannot be allowed. The reliance has been place on the decision of the Bombay High Court in the case of Khandelwal Industries Pvt. Ltd. V Commissioner of Income Tax reported in 2003 ITR page 925 and the decision of Punjab & Haryana High Court in the case of Tara Devi Behl v Commissioner of Income Tax reported in [(1996) 218 ITR, page 541]. Sri Ashish Bansal, learned counsel for the respondent submitted that in the cases of Khandelwal Industries Pvt. Ltd. V Commissioner of Income Tax (supra), the decision of the Apex Court in the case of B.R. Ltd v V.P. Gupta, Commissioner of Income Tax (supra) and in the case of Produce Exchange Corporation Ltd. V Commissioner of Income Tax (Supra) have not been considered and the Bombay High Court has just affirmed the view of the Tribunal without giving any reasoning. In the case of Tara Devi Behl v Commissioner of Income Tax (supra) the business has been discontinued by the firm and the assessee became partner in another firm. The Punjab & Haryana High Court has held that if the assessee ceases to carry on the business ....
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....ess as is referred to in section 33B which is discontinued in the circumstances specified in that section, and, thereafter, at any time before the expiry of the period of three years referred to in that section, such business is re-established, reconstructed or revived by the assessee, so much of the loss as is attributable to such business shall be carried forward to the assessment year relevant to the previous year in which the business is so re-established, reconstructed or revived, and (a) it shall be set off against the profits and gains, if any, of that business or any other business carried on by him and assessable for that assessment year ; and (b) if the loss cannot be wholly so set off, the amount of loss not so set off shall, in case the business so re-established, reconstructed or revived continues to be carried on by the assessee, be carried forward to the following assessment year and so on for seven assessment years immediately succeeding. (2) Where any allowance or part thereof is, under sub-section (2) of section 32 or sub-section (4) of section 35, to be carried forward, effect shall first be given to the provisions of this section. 3.No loss (other th....
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....inter-dependence, and unity at all embracing those two businesses "' That inter-connection, inter-lacing, inter- dependence and unity are furnished in this case by the existence of common management, common business organisation, common administration, common fund and a common place of business." Applying that test in the present case there is no doubt that there is a common management of the share and stock business and other lines of business, unity of trading organization, common employees, common administration, a common fund and a common place of business. We need not consider whether the ultimate decision of the High Court in Shree Ramesh Cotton Mills Ltd 's case (supra), on which reliance was placed is correct, but we are unable to agree with the High Court that the decisive test for determining whether the two lines of business constitute the same business is the nature of the two businesses. In our judgment, the Tribunal was right in holding that the share business and other businesses carried on by the appellant Company constituted the same business within the meaning of s. 24(2) as that section stood before it was amended in 1955." Section 24 (2) w....
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....port and the business of export carried on by the assessee and that they constitute the same business." In the case of Karnataka Light Metal Industries (P) Ltd v Commissioner of Income Tax (supra), the assessee company was engaged in the job work of flattening of wires supplied by M/s Karnataka Steel & Wire Products (herein referred to as "KSWP"). The KSWP was closed in the year 1975. Thereafter the assessee could not get any job work. The loss has been suffered in the business of job work and flattening of wires. The same has been carried forward to the assessment year 1982-83. The assessee claimed set off of such loss suffered in the earlier years with the income earned by purchase and sale of M/s Wires and Sodalime. The loss has been disallowed on the ground that that the loss relates to the business of flattening of wires, which had been discontinued and the present business carried on with business carried out by it earlier. The first appeal and the second appeal has been rejected. The matter went to High Court. The Division Bench of the Karnataka High Court held as follows: "In order to get the benefit of set off or carry forward of business loss of earlier years agains....
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....etween two or more businesses. If a person is engaged in one activity of business and for some reason or the other that activity had to be closed down and wants to take up a new line of business it must be said that he is not carrying on business as long as the same person is carrying on both the businesses. As a person carries on two lines of business at two different points of time, may be in some cases the same person may carry on several activities right from the inception or in the course of carrying on business he may change over to another line, that by itself does not constitute a separate business. What is to be seen in this case is business unity of control so far as the business is concerned. In this case it is clearly established. Because the same person has carried the job work of flattening of wires and also trading in purchase of sodalime, M. S. wire etc." In the case of Commissioner of Income Tax v Amar Singhji Mills Ltd (supra), the Gujrat High Court examined the provision of section 72 (1)(i) of the Act. In the said case the assessee showed its entire textile unit and subsequently started unit of purchasing grey cloth, getting it processed and then selling the ....