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TMI Blog1969 (2) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to Rs. 2,13,898 and Rs. 46,050 respectively were determined for the purposes of section 24(2) of the Income-tax Act, 1922, hereafter called " the Act ". In the first year a loss of Rs. 2,08,686 arose in cloth business whereas the balance of the loss occurred in the general section and the manure section. In the second year a loss of Rs. 46,050 occurred mainly in cloth business. During the three assessment years in question the Income-tax Officer refused to allow the carry forward of these losses and their set-off against the business profits of those years on the ground that the losses determined in the preceding years arose out of the cloth business which was different from the other business carried on by the assessee and since the cloth business was not carried on during the relevant year of account the loss therefrom in preceding years could not be carried forward and set off against profits of the other business. The Appellate Assistant Commissioner agreed with the conclusion of the Income-tax Officer. He rejected the contention of the assessee that common ownership, common direction and control, common financial arrangement, common staff and common balance-sheet necessaril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cloth were part and parcel of a single business carried on by the assessee and the loss therefrom could not be segregated as a loss from a distinct business for the purpose of section 24(2) of the Act. The High Court referred to certain other facts as found by the Appellate Assistant Commissioner. It had been found by him that the assessee was mainly doing banking business from 1942 to 1948 although it had, during that period, income from other sources. In the year 1948 it started acting as the distributing agent of cloth on behalf of the Government. That business continued till the year 1952 when control on cloth was lifted. The assessee disposed of, in retail, stocks left over during the first few months of the year 1953. Thereafter, the assessee ceased to have any dealings in cloth. The High Court quoted extensively from the order of the Appellate Assistant Commissioner. It felt that the Tribunal had not dealt with the matter in a satisfactory way. Reference was made to its own decision in another case in which it had been held by the High Court that in order to find out whether the business of an assessee was the same in two different years the primary consideration was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g : " (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 ... (ii) where the loss was sustained by him in any other business, profession or vocation, it shall be set off against the profits and gains if any, of any business, profession or vocation carried on by him in that year : provided that the business, profession or vocation in which the loss was originally sustained continued to be carried on by him in that year ; and .... " The argument before us has proceeded on the footing that the matter has to be decided under sub-section (2) as it stood before its amendment in 1955. The principal contentions on behalf of the appellant-assessee are two-fold. It is urged firstly that the findings on questions of fact given by the Tribunal were final and it was not open to the High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een referred, it was open to the High Court to examine the correctness of the conclusions of the Tribunal on facts. There can be no dispute that, if the Tribunal does not consider the evidence covering all the matters and bases its findings upon some evidence only ignoring other essential material, that would amount to a misdirection in law and the findings would give rise to a question liable to be referred to the High Court. But it is equally well settled that, if it is sought to raise the question about the validity of the findings on fact for one reason or another, reference of a proper question challenging those findings must first be sought before those findings can be challenged before the High Court : see India Cements Ltd. v. Commissioner of Income-tax and Hazarat Pirmahomed Shah Saheb Roza Committee v. Commissioner of Income-tax. No attempt was made before the Tribunal to have any such question referred and in the absence of a proper question it was not open to the High Court to accept the findings of the Appellate Assistant Commissioner in preference to those given by the Tribunal or to come to any independent conclusion itself on facts. The Tribunal gave the following ..... X X X X Extracts X X X X X X X X Extracts X X X X
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