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TMI Blog1965 (4) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the proceedings for the assessment year 1955-56 ( accounting year ended March 31, 1955). The assessee, L. VE. Vairavan Chettiar, was originally a partner in one M. VE. Firm which was carrying on business at Madurai, one in rice mill and the other in arecanuts. The said firm was dissolved on April 12, 1949. Thereafter, the assessee became the sole proprietor of the two businesses. For the sake of convenience, the assessee maintained separate sets of accounts for the two businesses connected through a current account but these two lines of the assessee's trading activities were inter-related and inter-connected with unity of control and common funds. In respect of the assessment year, the assessee claimed a net loss of Rs. 14,059 fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peared to have been tightly considered in the assessment. The Appellate Assistant Commissioner, however, held that the arecanuts business was not being carried on either during the accounting year relevant to the assessment year 1955-56 or the two succeeding years, and consequently there was no profit or loss to be computed in respect of the arecanut business, that on a perusal of the accounts it was seen that Rs. 70,000 out of the borrowals in the arecanut business was invested in the rice mill business, that the interest attributable to that sum was admissible as a deduction against the income from rice mill business. The Appellate Assistant Commissioner accordingly disallowed the loss of Rs. 13,559 under trade in arecanuts and computed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is common case that, after the assessee became the sole proprietor of the two businesses, he was maintaining two separate sets of accounts, one for the rice mill and the other for the arecanut business. It is also common case that he obtained an import licence for doing arecanut business. He also borrowed large sums of money for doing arecanut business. But due to adverse conditions in the market, he temporarily suspended the arecanut business for the assessment year in question. Nevertheless, he was maintaining the establishment and was waiting for improved market conditions in arecanuts. There is nothing on record to show that he completely abandoned or closed the business for ever. On the other hand, his books of account revealed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se in the middle of a great career a company, or still more an individual professional man, might have a year when he was holding himself out for business, or the company was holding itself out for business, but nothing came, yet that would not effect a break in the life of the company for income-tax purposes." In our own High Court, a similar question had to be considered in General Corporation Ltd. v. Commissioner of Income-tax. The assessee in that case carried on business in motor accessories and also in mica mining. The mica business was stopped on account of a cyclone. With a view to resume the production, the company did some prospecting work in the year of account keeping a reduced staff and incurred some expenses. The question fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ean that it has ceased to exist, if the assessee continues to maintain an establishment and incur expenses in the expectation that work would come and the business would be successful. How long he shall remain in the hope and in what manner he must carry on his work to gain success is primarily his own concern. The mere fact that for some time he is not able to secure a contract or do the work which he set out to do should not disqualify him from pleading that the expenditure that he had incurred was expended for the purpose of his business : see Inderchand Hari Ram v. Commissioner of Income-tax. Thus, on a review of these authorities, we think that the Income-tax Officer was right in allowing the loss of Rs. 13,559. Bat, still there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kalyanmal In re, Beaumont C. J. observed : " It is obvious that mere common ownership of the businesses does not mean that they are merely branches of the same business. It is also I think obvious that the mere fact that the two businesses are of a distinct nature does not necessarily mean that they are distinct businesses. You can have two branches of a multiple store, one selling drugs, and the other selling cloth. Nobody would suggest that these two departments constitute two different businesses. On the other hand, if you have a shop in Bombay selling cloth, and a shop in Ahmedabad selling drugs under different names and different management and under separate accounts, common ownership would hardly make them one business." In Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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