V.G. Oak, C.J. - (1.) THE short question for consideratian in this income-tax reference is whether two activities of an assessee constitute one business or two businesses. B. R. Sons (P.) Ltd., Kanpur, is the assessee. THE assessment years are 1950-51, 1951-52 and 1952-53.
(2.) THE assessee is a limited company, which was incorporated in 1945. Next year it acquired the managing agency of Meyer Mills Ltd. Under the terms of the agreement executed by the assessee for acquiring the managing agency, the assessee had to purchase the shares of the managed-company at an agreed price of Rs. 525 per share. For the assessment year 1947-48, the assessee claimed a huge loss of Rs. 21 lakhs and odd due to the revaluing of the shares of the managed-company at Rs. 273-12-0 per share as against the purchase price of Rs. 525 per share. THE loss was disallowed by the Income-tax Officer on the ground that it was capital loss. THE same view was taken by the Income-tax Officer for the assessment years 1948-49 and 1949-50. When the assessee took up the matter in appeal, the Income-tax Officer conceded before the Appellate Assistant Commissioner that the loss on revaluation of the shares of the Meyer Mills was partly allowable. When the Income-tax Officer took up the assessment for the assessment years 1950-51, 1951-52 and 1952-53, losses were worked out after deducting the dividend income which was treated as part of profits of the share dealing business. THE assessee claimed set off for the unabsorb-ed losses relating to the assessment years 1947-48, 1948-49 and 1949-50. That claim was largely disallowed by the Income-tax Officer on the ground that the loss could not be carried forward under Section 24(2) of the Income-tax Act, 1922, because managing agency and dealing in shares constituted separate businesses. This view was upheld in appeal by the Appellate Assistant Commissioner. But the assessee succeeded before the Appellate Tribunal. The Appellate Tribunal dealing with the assessment for the three years in question took the view that the two activities constituted one business. At the instance of the Commissioner of Income-tax, U. P., the Appellate Tribunal, Allahabad, has referred the following question of Jaw to this court: "Whether, on the facts and in the circumstances of the case, the business of managing agency of the Meyer Mills Ltd. and dealings in the shares of the said company constituted one and the same business?"
(3.) IT will be noticed that the question before the court has arisen out of the assessee's attempt to get adjustment for the unabsorbed losses of earlier years. In this connection, Dr. Misra appearing for the department contended that no question of adjustment arose, because the losses in question were capital losses and not revenue losses. This point was abandoned by the department before the Tribunal. Whether a certain loss is capital loss or revenue loss is a mixed question of fact and law. Since the point was abandoned before the Tribunal, the Commissioner cannot be permitted to raise the point at this stage that the loss of earlier years was capital loss. We would proceed on the assumption that the loss of earlier years was revenue loss. In Setabganj Sugar Mills Ltd. v. Commissioner of Income-tax, 1961 41 ITR 272, it was explained by the Supreme Court that in order to determine whether different ventures can be said to constitute the same businesss, what one has to see is whether there was any interconnection, any interlacing, any interdependence, any unity embracing the ventures, whether the different ventures were so interlaced and so dovetailed into each other as to make them into the same business.;