LexPRODUCE EXCHANGE CORPORATION LTD. versus COMMISSIONER OF INCOME TAX
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J82 PRODUCE EXCHANGE CORPORATION LTD. v. COMMISSIONER OF INCOME TAX April 27, 1970 [J. C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ] Indian Income-tax Act, (II of 1922) s. 24(2) Loss sufjered-C/aun or set off by the assessee fro1n its income-Whether assessee entitled-"Sa1ne A, B business", tests · C The assessee was a public limiiei!'company doing business as a ·dealer in diverse commodities and also in stocks and shares. In the year of account 1949 the company suffered loss in the sale of shares of public limited companies. In proceedings for assessment 'for the year 1950-51 the Income-tax Officer declined to take into account the loss suffered. D In his view if the loss be taken as a tr.ading loss it could not be set off against the business income of the assessee because the Joss resulted· from transactions in shares which constituted a busi·ness distinct from the busi- ness in other commodities. On the question whether the loss could be taken into. account and the set off given under ·s. 24(2) of the Indian Income-tax Act, 1922 in force in the year of assessment; this Court, E HELD : The assessee was entitled to the set off. Section 24(2) of the Indian Income-tax Act, 1922 in force in the relevant year of assessment contemplated that the loss which. could not be wholly set off against the other income under sub-s. (I) could be carried forward to the following year and set off only against the profits and gains, if any, from the same business. A fairly adequate 'test for deter- mining whether the two constitute the same. business is 'was there any inter-connection, any interlacing, any inter-dependence, any unity at a1l embracing those two business?' [385 H. 386 A-DJ Applying this test in the present case there was no doubt that there was .a common management of the share and stock business and other lines df business, unity of trading organisation, common employees, com- mon administration. common fund and a common Place of business. • [386 E-F] Com1nissioner of /ncorne-tax, Madras v. Prithvi Insurance Co1npany Ltd .. 63 I.T.R. 632 followed. Scales v. George Thompson & Co. (1927) 13 Tax Cases 83 applied. F G H , l C.I.T. V, MURUQAPPAN (Shah, J.) 383 A Shree Ramesh Cotton Mills Ltd. v. Commissioner of Income-tax 64 B c I.T.R. 317 doubted. CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2538 and 2539 of 1966. Appeals by special leave from the judgment and order dated March 26, 1965 of the Calcutta High Court in Income-tax Refer- ence No. 120 o.f 1961. D. Pal, T. A. Ramachandran and D. N. Gupta, for the appel- lant (in both the appeals). B. Sen, S. K. Aiyar and B. D. Sharma, for the respondent (in both the appeals). D The Judgment of the Court was delivered by Shah, J. The appellant is a public limited company doing business as a dealer in diverse commodities, and also in stocks and shares. The Company maintains its accounts according to the calendar year. In the year of account 1949 the Company E suffered a loss of Rs. 3,71.700 in the sale of share of public limit- ed companies. In proceedings for assessment of income-tax for · ;he assessment year 1950-51, the Income-tax Officer disallowed the claim to set off loss against the profits from transactions in other commodities in that year. The appeal filed before the Ap- F pellate Assistant Commissioner was unsuccessful. But the Ap- pellate Tribunal upheld the claim of the Company. G H In the meanwhile assessment for the year 1951-52 was coin- pleted, and the income of the Company was computed at Rs. 1,00,777. In proceedings for assessment of income for the &S- sessment year 1952-53 the Income-tax Officer computed the in- come of the Company from its business at Rs. 3,39,899 and dec- lined to take into account the loss suffered by the Company in the share transactions. I.n the view of the Income-lax Officer, even if the loss be treated as a trading loss it could not be set off against the business income of the Company, because the loss resulted from transactions in shares which constituted a business distinct from the business in other commodities. 384 SUPREME COURT REPORTS [1971] 1 S.C.R. In appeal against the order to the Appellate Assistant Com- missioner, the order of the Income-tax Officer was confirm~<.!. Th~ Appellate Assistant Commissioner held that the business in shares and the business in other commodities were not the "same bmi · ness" within the me
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