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TMI Blog1950 (9) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... ndivided family. It carries on business in the supply of cloth kirana and grain which is mainly on commission. It used to carry on business at the following three shops : (1) Hulasilal Ramdayal, Generalganj, Cawnpore. (2) Badridas Beharilal, Collectorganj, Cawnpore. (3) Badridas Beharilal, Halsey Road, Cawnpore. No. (1) does business in cloth and spices on commission. No. (2) does business in grain on commission. No. (3) used to do business in cloth and spices on commission, but it was discontinued with effect from Kartik Badi 6, corresponding to 17th October, 1935, i.e., within two months of the commencement of the previous year. The accounts of the assessee are made up in Bhadoun and the assessee's previous year commenced on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses. The assessee's contention is that this loss at the third shop should be deducted from the profits of the other two shops as all the three shops belong to the family and should have been treated as one business. The Income-tax Officer did not allow it on the ground that the loss at No. 3 had not arisen from the carrying on of any business which had been discontinued early in the previous year. A copy of the assessment order dated the 5th October, 1937, is annexed hereto as Exhibit A . 3. The assessee was not satisfied with the order of the Incometax Officer and, he, therefore, appealed to the Assistant Commissioner of Income-tax who went into the facts, and the law points involved in the case, in some detail, and refused to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad debts, etc., debited to the books in respect of the discontinued business at shop No. 3 at Halsey Road, Cawnpore, can be set off against the profits made by the assessee at the other two shops. 5. Opinion of the Commissioner.-The assessee has been run ning his three shops at three different localities and has been maintaining separate sets of accounts and since it is clear from the facts given above that the loss claimed by the assessee in respect of the bad debts, interest and other expenses occurred after the business at Halsey Road had been discontinued, such loss cannot be said to arise from the carrying on of business and is, therefore, to be treated as a loss of capital and not deductible from the profits of the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in the present case because it is common ground that if all these businesses have been carried on during the accounting year, the loss of one shop can under Section 24 of the Act be set off against the profits of the other two shops. The assessment year was 1937-38, but as the accounts of the assessee were made up from August to August. The accounting year in the present case was from the 19th of August 1935 to the 21st of August 1936. The Commissioner has found that the third shop, namely Badridas Beharilal, Halsey Road, Cawnpore, was closed on the 17th of October 1935, that is within two months of the commencement of the accounting year. The first two shops made a profit and according to the assessee the last shop suffered a loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 on account of Kirana and cloth was made on which the assessee made a small income of ₹ 2-14 only. The loss of ₹ 10,947 claimed by the assessee is made up of the following items : (1) ₹ 1,084 on account of interest. (2) ₹ 9,394 on account of bad debts. (3) ₹ 469 on account of miscellaneous items of expenses. He finally held that the Income-tax Officer was correct in having disallowed the losses and the appeal was, therefore, dismissed. The assessee then applied to the Commissioner under Section 33 of the Act for relief and alternatively for a reference to this Court under Section 66(2). No relief was granted by the Commissioner, and although three questions were required by the assessee to be referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntinued after ten days. The shop was discontinued after two months and the shop might well have remained open for the whole of these two months, only that no clients were available for the whole of these two months and no business deal actually operated upon for the whole of these two months. The fact remains that the shop was discontinued after about two months of the accounting year and as such the business was carried on during the accounting year and under section 24 a set-off is permissible Learned counsel for the Department, has, however, argued that all the business was done in the first ten days and it is not proper to hold that the business was carried on for any longer period than ten days. We feel inclined to agree with the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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