TMI Blog1969 (2) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Act as it stood at the material time ? " According to the statement of the case the assessee is a private limited company owning shares and securities and also doing business. The relevant assessment years are 1955-56, 1956-57 and 1957-58, the corresponding accounting years being the calendar years 1954, 1955 and 1956. In the assessment for the years 1953-54 and 1954-55 losses amounting 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her found that the assessee had been doing business in several commodities one after the other or along with the other and apart from the fact that a separate profit and trading account was maintained for cloth business there was nothing to suggest that the cloth business assumed the proportion or the stature of a distinct and separate business. It was accordingly held that the transactions 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 business, profession or vocation for that year ; . . . " Sub-section (2) of section 24 was substituted by section 16 of the Finance Act of 1955, the material portion for our purposes being : " (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out affecting the texture of the other and so forth. When, however, the true facts have been determined, the ultimate conclusion is a legal inference from proved facts, and it is one of mixed law and fact, on which depends the application of section 24(2) of the Act. " It is not possible to accept the submission made on behalf of the respondent that, in spite of the form in which the question had been 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 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses were common. It was held that the aforesaid factors did not necessarily lead to the inference that the businesses must be regarded as one and the same. It was observed that though not conclusive but an important test was whether one of the two businesses conducted by the assessee could be stopped without affecting the texture or framework of the other. However in Commissioner of Income-tax v. Prithvi Insurance Co. Ltd. this court said : " We are unable to agree with counsel for the Commissioner that the test, whether one of the businesses can be closed without affecting the conduct of the other business, is a decisive test in determining whether the two constitute the same business within the meaning of section 24(2) ". In that very case the test laid down by Rowlatt J., in Scales v. George Thompson and Co. Ltd. was accepted as a fair test and inter-connection, inter-lacing, inter-dependence and unity were found to exist by virtue of the common management, common business organisation, common administration, common fund and common place of business. We have no manner of doubt that on applying these principles the conclusion at which the Tribunal arrived was correct and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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