TMI Blog1934 (12) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome from dividend. The assessee-company is a limited company registered in 1904 under the Indian Companies Act. The main objects of the Company as set out in its memorandum of association are: (1) to acquire and carry on the business then carried on by the Chittivalsah Spinning and Weaving Company, Limited at Chittivalsah, (2) to acquire and carry on the business then carried on by the Madras Portland Cement and Tile Works, Limited, at Madras and Bangalore and (3) to acquire and carry on the business then carried on by Messrs. Arbuthnot amp; Company, Madras, including (a) Cement Works in Calcutta (b) Rice Mills at Needamangalam and Tiruvalur and (c) Reliance Foundry at Madras. There is also another object set ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th an increase of its share capital but apparently without success. From that year onwards, the Income-Tax Commissioner finds that the company was existing merely to dispose of its various concerns to their best advantage before closing down finally, and the letters referred to by him clearly support such a finding. It is clear that, with regard to the businesses in respect of which the assessees claimed to set off the respective losses, no trade was done in them since November 1925 except sales of old stock during the year of account amounting to ₹ 260 in the Madras Cement Works and ₹ 1,806 in the City Brick and Tile Works, Bangalore, No purchase was made or anything manufactured during this year. On the contrary, it is admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital which was sunk in the cloth business was lost before 1924; and the trader having had to pay interest on that lost capital in 1924-25, the year of assessment, claimed deduction therefore from the assessable profits of his remaining banking business for the year 1924-25. It was held that though the branches were distinct the trade was one and though the lost capital was not available for use in the trade, namely, the banking business, in the year of assessment, the interest paid on it should be deducted under Section 10(2) (iii) of the Indian Income Tax Act. The facts were that the assessees were a Nattukottai Chetty firm trading under the vilasam of A.L.A.R., their primary business being the usual Nattukottai Chetty business of bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll one business, namely, the company's business. That is not so. A company can carry on several distinct and separate businesses and it must always be a question of fact whether those businesses are separate businesses or whether they are so interlocked with the main chief business of the company as to be really one business, for example, a railway company carrying on a steam boat business in connection with its railway. This distinction has been recognised in cases under the Income-Tax Acts in England. One of these is Scales v. George Thompson amp; Co., Ltd., (13 Tax Cas. 83). There the respondent was incorporated in 1905 to take over as a going concern the business of George Thompson amp; Co., ship owners, ship and insurance brokers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d; they do not dovetail into each other, except that the people who are in them know about ships; but the actual conduct of the business shows no dovetailing of the one into the other at all. They might stop the underwriting; it does not affect the ships. They might stop the ships and it does not affect the underwriting . The same observations can be applied to the present case equally well. The company could cease any one or more of its activities without stopping the others and without getting rid of their share-holding in the Chittivalsah Jute Mills Company Ltd. Similarly, they could get rid of their Chittivalsah Jute Mills shares without stopping any of the other concerns. Cases like the present are dealt with in the Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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