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TMI Blog1994 (3) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... from the managing agency business against the income of the assessment years 1972-73 to 1975-76 even though the said managing agency business was not continued in the relevant years ? " For the assessment year 1976-77, the question reads as follows : " Whether, on the facts and in the circumstances of the case and having regard to the proviso to sub-clause (i) of sub-section (1) of section 72 of the Income-tax Act, 1961, the Appellate Tribunal was correct in holding that the business carried on by the assessee was one and the same and, accordingly, the assessee was entitled to set off of the loss of the assessment year 1970-71 from the managing agency business against the income of the assessment year 1976-77 even though the said managing agency business was not continued in the relevant year? " The brief facts may now be noted : The assessee, who is common in all these cases, is a private limited company incorporated on May 3, 1943. The objects for which the company was established, as specified in the memorandum of association included, inter alia, the following activities : " the business of financiers, financial agents, concessionaries, capitalists, merchants, truste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved even during the assessment year 1972-73 which business having been continued, it will not be right on the part of the Revenue to treat the commission from managing agency alone as independent and distinct business to deny the carry forward loss and set off. However, the Appellate Assistant Commissioner concluded that the loss of earlier years attributable to the managing agency receipts could not be set off against any other income as the same business was not continued during the assessment years in question. On that view, the Appellate Assistant Commissioner dismissed the appeals. Second appeals were preferred before the Tribunal. Before the Tribunal, on behalf of the assessee, it was contended that the assessee was carrying on a single business and at least as far as assessment years from 1971-72 onwards are concerned, it was a single business of agency. In any event, it was contended for the assessee before the Tribunal that the managing agency was only one facet of such business, viz., agency business, and commission agency was just another facet, and, discontinuance of one facet would not mean discontinuance of the business itself. In support of that contention, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly of tea chests for the Blue Mountain Estate. The entire agency business is a single business of which managing agency is one facet and commission agency is another. The businesses are not separate or distinct businesses and, therefore, the requirement of the proviso to sub-clause (i) to section 72(1) of the Income-tax Act, 1961, is satisfied. " In the light of the above findings on the facts based on materials placed before it, the Tribunal found that the assessee is entitled to carry forward the loss and set off the same against the income during the years in question. In these circumstances, at the instance of the Revenue, the present references were made by the Tribunal under section 256(1) of the Act. Mr. N. V. Balasubramanian, learned counsel appearing for the Revenue, placing reliance on the judgments of this court in Waterfall Estates Ltd. v. CIT (No. 1) [1981] 131 ITR 207, CIT v. Blue Mountain Estates and Industries Limited [1985] 151 ITR 616, Tube Suppliers Ltd. v. CIT [1985] 152 ITR 694 and CIT v. Veecumsee [1985] 152 ITR 708, argued that the Tribunal was not right in holding that the managing agency business is one facet of the agency business carried on by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, to apply the same to the facts of this case. We are unable to agree with learned counsel for the Revenue, as the circumstances under which the learned judges rejected such contention cannot be ignored. In the course of the judgment, the learned judges have observed as follows (at page 220): " The onus is thus on the assessee to show that the different ventures in the present case constituted parts of the same business. As seen already, the assessee was given an opportunity to place relevant materials to establish that the several activities carried on by the assessee constituted a single business. As the assessee did not avail itself of this opportunity, the onus has not been discharged in the present case. The apportionment made by the assessee in all the earlier years clearly establishes that these businesses, viz., running the tea estate, the coffee estate and the coffee curing works were all treated as different businesses by the assessee itself. There is no change of circumstances in these years, which would justify a different stand being taken by the assessee. " The facts in our case are entirely different, which we have already set out, and which we will state again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment, the decision rendered by this court in CIT v. Blue Mountain Estates and Industries Ltd. [1985] 151 ITR 616 has also been dealt with. The learned Chief Justice, speaking for the Bench, after referring to CIT v. Blue Mountain Estates and Industries Ltd. [1985] 151 ITR 616 (Mad), has observed that that decision does not affect the test laid down by the Supreme Court, and what seems to have weighed with the learned judges was that fertilizer was not a commodity which the company was dealing in the ordinary course of business in coffee or tea. The learned Chief Justice further hold that decision must, therefore, be read as merely applying the test to the facts in the case which the court was called upon to consider, and that decision must be treated as one given on its own facts. Likewise, while referring to the decision in Tube Suppliers Ltd. v. CIT [1985] 152 ITR 694 (Mad), it was held in CIT v. S.S.M. Ahmed Hussain [1987] 164 ITR 525 (Mad) that that decision is liable to be distinguished, as pointed out by the Tribunal. On the facts, it was found that the assessee carried on several distinct and independent businesses. We are further inclined to hold in the same manner that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious lines of business. Even after certain assets were transferred to the minor Hindu undivided family in the partition arrangement, the assessee was doing business in films. Simply because one line of business was closed or that part of the business assets relating to cine colour processing was transferred to the minor Hindu undivided family, it would not mean that the assessee had discontinued its entire business in films. The bad debts amounting to Rs. 17,693 and the expenses amounting to Rs. 21,682 were deductible from the profits of the continuing business. " Now, at the risk of repetition, the facts of this case may be recalled in short. The assessee was appointed as the managing agents of Blue Mountain Estate and Industries Limited shortly after incorporation. The assessee continued to receive income from managing agency over the years. In the assessment year 1969-70, there was a net loss under the head " Business ". This loss related to the managing agency receipts. The Tribunal found that during the assessment year 1970-71, there was only income from managing agency and in the year 1971-72, there was income from managing agency as well as from other commission. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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