TaxTMI 
TaxTMI 
1969 (2) TMI 6
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....s. 24,532 from the dissolved firm to M/s. A. Dharma Reddy, Morthad, brought forward from the assessment year 1955-56 against his other business income for the assessment year 1956-57 ? " The assessee is an individual whose only sources of income were his shares in several partnership concerns. Apart from the firms which carried on other businesses there were two firms which carried on the business in bidi leaves. The first was styled as M/s. A. Dharma Reddy, Morthad. The second firm was called A. Dharma Reddy and Co., Ditchpally. The first partnership was dissolved on March 31, 1955, but the second one continued during the assessment year 1956-57. During the assessment year 1955-56 the assessee sustained a loss of Rs. 30,255 in the first ....
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....he assessment year 1955-56. The assessee had admitted in a letter dated September 16, 1960, that the two firms had nothing to do with each other and there was no material to show that the business of the dissolved firm was taken over by the other firm. The Appellate Assistant Commissioner, therefore, came to the conclusion that the business in which the loss was originally sustained could not be said to have continued during the assessment year 1956-57. The assessee took the matter to the Income-tax Appellate Tribunal which upheld the contention of the assessee that the same business of bidi leaves continued during the assessment year. According to the Tribunal the assessee was carrying on two businesses in bidi leaves as partner in two dif....
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.... Income-tax Commissioner who is the appellant before us it is necessary to set out the relevant statutory provisions. Before the amendment made by the Finance Act of 1955, section 24(2) was as follows : " (2) Where any assessee sustains a loss of profits or gains in any year, being a previous year not earlier than the previous year for the assessment for the year ending on the 31st day of March, 1940, in any business, profession or vocation, and the loss cannot be wholly set off under sub-section (1), so much of the loss as is not so set off or the whole loss where the assessee had no other head of income shall be carried forward to the following year and set off against the profits and gains, if any, of the assessee from the same busines....
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....For getting the benefit under that section it was essential that the business in which the loss was sustained should be continued to be carried on for the assessment year in question. This means that the same concern or partnership which carried on the business in the previous year should continue to function in the year of assessment. There is no warrant for the proposition put forward on behalf of the appellant that, in order to get the benefit of section 24(2)(ii) of the Act, especially after the amendment made by the Finance Act, 1955, the assessee should carry on the same business in the year of assessment. The change in the language of the provision substituted by the Amending Act is significant and all that the assessee has to show....
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....mport, the underlying idea being of continuous exercise of an activity. As pointed out by S. R. Das J. (as he then was ) in Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax, the word " business " connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose. The systematic or organised course of activity of the assessee, in the present case, consisted of dealings or taking of contract in bidi leaves. That business did not depend on the constitution of a partnership firm through which it was carried on nor could it come to an end so long as the assessee carried on the same systematic or organised course of activity with a set purpose. The computation of a partner's share in ....
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.... was entitled to set off his share of the loss incurred by the firm against the profits accruing to him from the business as a sole proprietor. The Delhi High Court in S. Narain Singh v. Commissioner of Income-tax had to deal with a case where an assessee had taken certain liquor contracts and carried on the business of sale of liquor in his individual name and sustained losses. Subsequently, he carried on the same business with 10 other persons and sought to set off the previous losses against the profits made in the accounting year. Referring to the meaning and construction of the words " same business " as they stood in section 24(2) before the amendment made by the Finance Act of 1955, it was held that the assessee was entitled to carry....