1970 (4) TMI 18

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nt year 1950-51, the Income-tax Officer disallowed the claim to set off loss against the profits from transactions in other commodities in that year. The appeal filed before the Appellate Assistant Commissioner was unsuccessful. But the Appellate Tribunal upheld the claim of the company. In the meanwhile assessment for the year 1951-52 was completed, and the income of the company was computed at Rs. 1,00,777. In proceedings for assessment of income for the assessment year 1952-53 the Income-tax Officer computed the income of the company from its business at Rs. 3,39,899 and declined to take into account the loss suffered by the company in the share transactions. In the view of the Income-tax Officer, even if the loss be treated as a tradi....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....gly, the Tribunal upheld the claim of the appellant company and directed that the loss be set-off under section 24(2) of the Indian Income-tax Act, 1922, then in force. The Tribunal referred the following question to the High Court of Calcutta : " Whether, on the facts and in the circumstances of the case, the business activities of the company, to wit, dealings in shares and its dealings in other commodities and selling agency on commission basis, constituted the same business within the meaning of section 24(2) of the Indian Income-tax Act, 1922 ? " The High Court held, following their judgment in Shree Ramesh Cotton Mills Ltd. v. Commissioner of Income-tax, that the " essential matter to be considered in determining whether the two....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... the same business, profession or vocation for that year ; and if it cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following year, and so on ;..... " The section contemplated that the loss which could not be wholly set off against the other income under sub-section (1) could be carried forward to the following year and set off only against the profits and gains, if any, from the same business. There was difference of opinion among the High Courts as to the meaning of the words " same business ". It is unnecessary to refer to those authorities. This court in Commissioner of Income-tax v. Prithvi Insurance Co. Ltd. set out the test for determining whether two lines of businesses constitute th....