STONE, C.J. - (1.)-
(2.)THIS is a reference under Section 66(1) of the Income-tax Act, and the question which we are asked, in our advisory capacity, to express an opinion upon, is whether the loss which was incurred by the assessee company and which was attributable to speculation in silver can be set off, in the following year, against the income, profits and gains in speculation in cotton, having regard to the provisions of sub-section 24(2) of the Income-tax Act. That sub-section provides that such a set off in a subsequent year can only be made against income, profits and gains from the same business.
The question as framed by the Tribunal in the original case was :-

Whether in the circumstances of the case the assessee is entitled to set off the loss of Rs. 71,008 in silver speculation carried forward from the assessment for 1940-41 against the profits from speculation in New York cotton considered in the assessment for 1941-42, under Section 24(2) of the Indian Income-tax Act, 1939 ?

Sub-section 24(2) is in these terms :-

Where any assessee sustains a loss of profits or gains in any year, being a previous year not earlier than the previous year for the assessment for the year ending on the 31st day of March, 1940, under the head Profits and gains of business, profession or vocation, and the loss cannot be wholly set off under sub-section (1), the portion not so set off shall be carried forward to the following year and set off against the profits and gains, if any, of the assessee from the same business, profession or vocation for that year.

There follows a provision for a still further carry forward. The material words, which are to be noted, are that it must be from the same business, profession or vocation.

In their judgment the Appellate Tribunal commenced in paragraphs 1 and 2 by stating the facts which are as follows :-

1. THIS appeal relates to an assessment made upon the appellant company for the charge year 1941-42. It is a private limited company and was registered on 16th November, 1937. Its various objects are described in paragraph 3 of the Memorandum of Association which include carrying on business as managing agents of the Seksaria Cotton Mills Ltd., any trade, business, manufacture or commercial operations in any part of the world in any merchandise, commodities, goods, etc., and establishing and maintaining agencies at any place or places in the world for the conduct of the business of the company. The previous year, i.e., account year, of the company for the purpose of income-tax is the calendar year (1940).

A part of the assessee companys business is speculation in wheat, linseed, silver and cotton. In the account year 1939 it incurred a loss of Rs. 5,445 in linseed and wheat, and Rs. 1,33,875 in silver. In the assessment of 1940-41 the loss was adjusted against income, profits and gains of the company from other sources. But it could not be wholly set off, and a net loss of Rs. 71,008 was carried to the next year. In the account year 1940 the assessee speculated in the New York cotton and made a profit of Rs. 2,04,827 which was brought into the present assessment for 1941-42. It claimed to set off the net loss of Rs.71,008 carried forward as just stated, against the profit in New York cotton. The Income-tax Officer held that the set off could not be allowed having regard to Section 24(2) of the Indian Income-tax (Amendment) Act, 1939. His view was upheld by the Appellate Assistant Commissioner.

The Tribunal held that the speculations in New York cotton were not the same business as speculation in silver in Bombay.

In that state of the record this matter came before us in October, 1944, and in referring the case back to the Tribunal my learned brother Kania delivering the judgment of this Court on the 12th October, 1944, said :-

The question whether the business is the same, under Section 24(2) is a question of fact. It is a conclusion to be drawn from various facts which are established from the records produced before the Tribunal. The question, which this Court can consider is whether any evidence exists for the conclusion of the Tribunal. Apart from that, the Tribunal being the final fact-finding authority, this Court cannot go into the question. From that aspect the two statements found in the statement of the case appear to be conflicting. In paragraph 3 it has stated : A part of the assessees business is speculation in wheat, linseed, silver and cotton. Towards the end of paragraph 5 it has stated : We held that speculation in silver, wheat and linseed and that in New York cotton were not the same business within the meaning of the section. It may be noted that at this stage also the Tribunal has omitted to notice the word cotton in describing the nature of the business of the assessee, as it had first described.

The supplemental case returned to us by the Tribunal, and which is now before us is highly unsatisfactory. The Tribunal appear to be far more concerned with excusing the statements of fact in the first case, which are unquestionably contradictory, than with complying with the directions of this Court given under Section 66(4) of the Income-tax Act. In the supplemental case the Tribunal states : We have recorded a clear finding that in account year, 1939, the assessees business relevant to the question was in wheat, linseed and silver only, while that in 1940 was in cotton. And finally they stated :-

The affidavit that we have referred to (i.e., an affidavit of Mr. Pralhadrai Brijlal) is annexed to this supplementary statement, Exhibit F. It is stated therein that speculation business in different markets and in different commodities constitutes one and the same business. That is a matter of argument. Further, it is stated that speculation business is one unified and organised activity of the assessees and that it is carried on with the same staff and with the aid of the same accounts and in the same premises. This fact was not before us when we heard and disposed of the assessees appeal. And we are unable to include it in the case at this stage of the proceedings and equally because it requires to be established by evidence which is not before us.

(3.)THE matter was referred back to the Tribunal to record its finding of fact more clearly, and implicit in that direction is the taking of further evidence, if there is no other way of determining facts in order that the Tribunal may make its finding clear. For the Tribunal to say that because a fact was not before it when they disposed of the assessees appeal, We are unable to include it in the case at this stage of the proceedings, is a most surprising statement and is one which indicates that the Tribunal does not appreciate the duties cast upon it when this Court refers a matter back under Section 66(4). THE reference back to the Tribunal was to record its finding more clearly and after a lapse of one year and ten months the matter now comes back with nothing new except the affidavit of Mr. Pralhadrai Brijlal, which is annexed to the supplemental case. THE delay is not due to any fault of the Tribunal, but it is very oppressive on the assessee, who under the proviso to Section 30 of the Act has had to pay the full amount of the claim.
To the affidavit of Mr. Pralhadrai Brijlal there has been no affidavit in answer, and no application to cross-examine the deponent upon his affidavit has been made. Mr. Setalvad on behalf of the Commissioner states, and I think, very fairly and properly, in the circumstances, that he is prepared to accept the affidavit as it is uncontroverted.

Paragraph 1 of the affidavit which is the only paragraph relevant to what we have to consider says :-

From the date of its incorporation a part of the business of the applicants consisted of speculation in different markets in different commodities. It may be that in any particular accounting year the applicants may not have speculated in any particular market or in any particular commodity but that was because the applicants thought it not advisable or expedient to do so during the particular accounting year. From the commencement speculation business in different markets and in different commodities constituted one and the same business of the applicants. In proof of the fact that the applicants dealings in several markets in different commodities form part of the same business I produce the following evidence. One of the objects of the incorporation is to carry on speculation business in any part of the world in any commodity. For brevitys sake I crave leave to refer to the memorandum and articles of the company when produced. Speculation business is one unified and organised activity of the applicants. Speculation business is carried on with the same staff and with the aid of the same accounts and in the same premises. The nature of all speculative business is the same and the difference in commodities or the difference in the markets makes no difference to the nature of the speculative business.

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