Income-tax---

----Loss---Carry forward and set off---Same business or separate business-- Managing agency business and dealing in iron and steel pipes do not constitute same business-:-Indian Income Tax Act, 1961.

The assessee was acting as the managing agent of two companies. The assessee incurred losses in this business. During the previous year relevant to the assessment year 1972-73, the assessee stopped its managing agency business and started trading in iron and steel pipes. Before the income-tax authorities as well as before the Tribunal, the assessee claimed that the loss suffered by it in the managing agency business should be carried forward and set off against the profits earned in dealing in iron and steel pipes. The income tax authorities as well as the Tribunal did not accept the assessee's contention. On a reference:

Held, that, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the business activity of the assessee in the past of managing agency up to March 31, 1970, and the business activity of trading in iron and steel pipes during the accounting year relevant to the assessment year 1972-73 did not constitute the same business.

Subhash Shetty with Dinesh Vyas and P.C. Tripathi for the Assessee.

G.S. Jetly with P.S. Jetly for the Commissioner.

JUDGMENT

U.T. SHAH, J.---In this reference, the only issue involved pertains to the assessee's claim for setting off of loss incurred in managing agency business against profit made in dealing in iron and steel pipes.

The assessee is a company. The assessment years are 1972-73 and 1973-74 and the previous years are the corresponding financial years ending on March 31, 1972, and March 31, 1973, respectively.

Previously, the assessee was acting as managing agents of two companies, viz., Messrs Khandelwal Udyog Ltd. and Messrs Khandelwal Ferro Alloys Ltd. The assessee incurred losses in this business. During the previous year relevant to the assessment year 1972-73, the assessee stopped the managing agency business and started trading in iron and steel pipes.

Before the Income-tax authorities as well as before the Tribunal, the assessee claimed that the loss suffered by it in the managing agency business should be carried forward and set off against the profits earned in dealing in iron and steel pipes. The income-tax authorities as well as the Tribunal did not accept the assessee's contention. The assessee, therefore, made an application' under section 256(1) of the Income Tax Act, 1961, and requested the Tribunal to refer the following questions for the opinion of this Court:

"(1) Whether, on the facts and circumstances of the case, the business activity of the assessee in the past, of managing agency up to March 31, 1970, and the business activity of trading in iron and steel pipes during the relevant previous years constituted one and the same business and it could be said that the business which the assessee carried on in the assessment years 1967-68 to 1969-70 continued to be carried on by the assessee during the relevant two previous years?

(2) If the answer to question No.l is in the affirmative, whether the assessee is entitled to the carry forward and set-off of the losses incurred in the assessment years 1967-68 to 1969-70 against the profits of the relevant previous years?"

Learned counsel for the assessee reiterated the submissions which were made before the Tribunal and strongly urged that the loss suffered in the managing agency business should be allowed to be set off against the profits made in dealing in iron and steel pipes. Learned counsel for the Revenue, on the other hand, submitted that since no fault could be found in the action of the income-tax authorities as well as the Tribunal, the reference should be answered against the assessee.

On due consideration of the submissions of the parties and after carefully going through the order of the Tribunal, we do not find any infirmity in its order, declining to accept the assessee's contention regarding carry forward and set-off of losses. In this view of the matter, we answer question No.l in favour of the Revenue and against the assessee.

In view of our answer to question No.l, the issue involved in question No.2 becomes academic and need not be answered.

No order as to costs.

M.BA./219/T.F.Order accordingly.