TMI Blog1978 (4) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... s being those ended on 12th April, 1958, and 12th April, 1959, respectively. According to the assessee, he carried on a sole proprietary business in the name and style of Messrs. Gianchand Sunderdass (Gian Chand being the name of his brother) at Jhelum (now in Pakistan) till 1948. The business consisted of supplying stones and other building materials to the Government under contracts. While he was at Jhelum, he had submitted a tender to the Central Government for supplying 20,000 boundary stones for the use of the Survey Department, and the same was accepted by the Government on May 24, 1947. A formal agreement was drawn up on 11th June, 1947, and the same was signed by Sunderdass for Messrs. Gian Chand Sunderdass. On 25th May, 1947, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tnership was Rs. 0-9-6, while the share of Sardar Singh was Rs. 0-6-6. Separate accounts were being maintained for the new partnership business. In the assessment years 1958-59 and 1959-60, the assessee claimed a deduction of the aforesaid loss of Rs. 19,783 out of the share of profit received by him from the firm of M/s. Bhai Sunderdass Sardar Singh. The ITO held that the assessee failed to prove the loss claimed by him and that, even otherwise, it was a capital loss. In that view, he rejected the assessee's claim. The assessee preferred appeals to the AAC as regards the claim for deduction of the loss of Rs. 19,783. He took the view that, if at all it was a loss, it had taken place in the year 1947, that the contract business of suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also different from that of the present business, that separate accounts were started for the present business, and that in those circumstances the loss, if at all, was a trading loss of an extinct business and no deduction could be claimed by the assessee in the assessment years under consideration. The Appellate Tribunal, by its order dated 29th March, 1967, held that the assessee proved that the loss of Rs. 19,783 was suffered in the course of the business carried on at Jhelum, and that it was a trading loss. The Tribunal, however, came to the conclusion that the two businesses were distinct businesses. It pointed out, inter alia, that there was no evidence to show that the present business was being carried on by the same organisat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1927] 13 TC 83 (KB), which have since been applied in various subsequent rulings (vide K. S. S. Soundrapandia Nadar Brothers v. CIT [1950] 18 ITR 163, 171 (Mad), Setabganj Sugar Mills Ltd. v. CIT [1961] 41 ITR 272, 274 (SC) and CIT v. Prithvi Insurance Co. Ltd. [1967] 63 ITR 632, 637 (SC). The observation of the learned judge containing the indicia ran at follows (at page 89) : " I think the real question is, was there any interconnection, any interlacing, any interdependence, any unity at all embracing those two businesses. " In the case of Setabganj Sugar Mills Ltd. [1961] 41 ITR 272, the Supreme Court of India, after referring to the aforesaid observation of Rowlatt J., observed as follows (at page 274) : " The learned judge al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd and a common place of business. " In the present case, as pointed out by the Tribunal, there is no evidence to show that the present business was being carried on by the same organisation and employees which carried on the previous business. The previous business of supplying stones and other building materials was materially different in its nature from the subsequent business of constructing Government buildings under contracts. Also, the previous business was being carried on by the assessee as a sole proprietor, while the subsequent business was being carried on by a firm in which the assessee was only a partner. The names of the firms were also different. Further, separate accounts were being maintained for the subsequent partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt contractor, and that there was thus a nexus and interconnection between the two. There is no force in the said contention. The earlier business consisted of supplying, i.e., selling stones and other building materials to the Government under contracts at tendered rates. The subsequent business consisted of constructing buildings for the Government under contracts. There is a marked difference between the two. The former consisted of selling articles to the Government, while the latter does not involve any transaction of sale between the assessee and the Government. Each of the two businesses had thus a distinctive nature and character. The mere fact that in both the cases contracts were executed between the assessee and the Government do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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