DALSUKHRAI JAIDAYAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is one of the many cases that have recently come up before us, in which a great deal of difficulty has been caused by reason of the Appellate Tribunal not having clearly found the facts in its appellate order or not having clearly set out the facts in the statement of the case.

(2.) THE assessee, a Hindu undivided family, has been carrying on business for many years THE head office of the business is at Banaras with two other branches in the same city. THE assessee has also a branch in Calcutta. At the head office at Banaras wholesale business is done in Benarsi cloth in the name of Dalsukhrai Jaidayal. At Lakhi Chabutra branch, Banaras, wholesale business is done in cotton cloth in the name of Jaidayal Gajanand. THE other branch at Thatheri Bazar, Banaras, does business in silk in the name of Gajanand Balmukund. THE branch in Calcutta does business in the name of Jaidayal Gajanand. In the words of the Tribunal, this branch launched forth in fairly large speculations in linseed, hemp, hessian, gold, silver, jute, rice, cotton yarn and shares. It also did some business in Banarsi cloth. In the Calcutta branch two sets of account books were maintained, one related to the speculative part of the business which consisted of forward transactions and the other related to business done in Banarsi goods. In the assessment year, 1939-40, account year 1938-39, the Calcutta branch incurred a loss of Rs. 6,411 in share business. In the year 1940-41 it showed a profit of Rs. 3006 in share transactions and a much larger profit in the other speculative transactions which appear-ed to have been in linseed and hemp. THE assessee claimed that the loss of Rs. 6,411 of the account year 1938-39 should be set off against the profits made in speculative transactions in Calcutta in the year 1940-41. THE Income-tax Officer, however, allowed only the sum of" Rs. 3006, which was the profit made in share dealings, to be set off and held that the balance of the loss of Rs. 3,405 could not be set off against the profits made in speculative transactions on the ground that under Section 24 (2) the losses for the previous year could be set off only against the profits made in the following year m the same business. THE relevant portion of the Sub-section, relied upon, reads as follows :

(3.) MR. Gopalji Mehrotra, learned counsel for the assessee, at one time attempted to support the order on the ground that if an assessee speculates in different kind a of commodities, then the dealings in each kind of commodity must necessarily be a separate business. This, to my mind, is obviously wrong. The question whether the business is the same business must depend on the manner in which the business is carried on and what are the facts that have to be considered has been laid down by Rowlatt J. in Scales v. George Thomson and Co. Ltd., 1927 13 Tax Cas. 83 : (138 L. T. 331), It has to be found whether there was any inter-connection, interlacing, inter-dependence and unity embracing the two businesses. No such attempt seems to have been made by the Appellate Tribunal.