TMI Blog1962 (11) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 41,330 in the head office. The loss of that year was sought to be set off against the estimated income of the assessment year 1951-52 and that was disallowed by the Income-tax Officer. An appeal was taken to the Appellate Assistant Commissioner. The appellate authority held that the head office did not transact any separate business, being only a controlling office which supplied finance to the various activities of the assessee. The loss in the earlier year relating to the head office was mainly due to interest paid on loans and overhead expenses. The appellate authority thought that the loss allowable to be set off in this regard must be limited only to the payment of interest during the accounting year and accordingly allowed ₹ 20,000 to be set off. In dealing with the question of carry-forward the Appellate Assistant Commissioner took the view that the business of all the various activities are all carried on in the head office address where there is the controlling staff, telephone, etc. Having regard to those various aspects I agree that the various activities of the appellant other than the share in the partnerships constitute one business. The loss of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permits an assessee to set off the loss under any of the heads mentioned in section 6 against his income, profits or gains under any other head in that year, that is to say, if a loss of profit is sustained in any year under the head of business, it is open to the assessee to have that loss set off in whole or in part against the income, profits or gains under any of the other heads such as income, profits and gains from salaries or from interest on securities or income from property or income from other sources of that year. If the whole or part of the loss arising from the business cannot be so set off under section 24(1) against the income derived under any other head than business, sub-section (2) permits the carry forward of the whole or part of the loss not so set off to the following year and set off against the profits and gains, if any, of the assessee from the same business. It seems to be implicit in the section that though various activities may be comprised in the business of the assessee, in order to enable the carry-forward and set-off in a subsequent year, the same business should be carried on in that subsequent year. If it was the intention of the provision that b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Cas. 83, which read: That method of book-keeping does not seem to me to throw any light upon this matter at all. I think the real question is, was there any inter-connection, any interlacing, any interdependence, any unity at all embracing those two businesses.... That English decision related to a case where a shipping business and an underwriting business were carried on by a company and it was held that in the absence of any dovetailing between the two businesses, the cessation of the one not affecting the other, the two had nothing whatever to do with each other and that they did not therefore constitute one trade. No doubt the learned judges held that inter-dependence was not the sole test. They next referred to Chidambaram Chettiar v. Commissioner of Income-tax [1945] 13 I.T.R. 177, which was a case of a Nattukottai Chetty carrying on money-lending and banking business in British India and also at Penang and other places in the Federated Malay States. This decision purported to follow the principles indicated by Rowlatt J. in the English decision. The unity of control, the flow of remittances from headquarters to branches and branches to headquarters, the ascer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the other. The Supreme Court in Setabganj Sugar Mills Ltd. v. Commissioner of Income-tax [1961] 41 I.T.R. 272; [1961] 2 S.C.R. 488 accepted the principles laid down by Rowlatt J. in Scales v. George Thompson and Co. Ltd. [1927] 13 Tax Cas. 83. They further observed: These principles have to be applied to the facts before a legal inference can be drawn that a particular business is composed of separate businesses and is not the same one. No doubt, findings of fact are involved, because a variety of matters bearing on the unity of the business have to be investigated, such as unity of control and management, conduct of the business through the same agency, the inter-relation of the businesses, the employment of same capital, the maintenance of common books of account, employment of same staff to run the business, the nature of the different transactions, the possibility of one being closed without affecting the texture of the other and so forth. Mr. Ranganathan, learned counsel for the department, relies upon the above decisions and claims that on the basis of the principles that are ascertainable therefrom it is impossible to accept the contention of the assessee in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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