K S S SOUNDARAPANDIA NADAR AND BROS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The Appellate Tribunal, Madras bench, referred under Section 66 (1), Income-tax Act, the following question for the opinion of the High Court:

(2.) The fundamental question that arises for decision is therefore whether the two lines of business carried on by the assessees constitute the same business within the meaning of Section 24 (2), Income-tax Act, or distinct businesses. Under Clause (2) :

(3.) The question whether the business is the, same or not is no doubt essentially one of fact. If, however, there is no evidence to support the finding, or a proper inference from the proved facts was not drawn, they are questions of law. The judgment of the Appellate Tribunal does not give sufficient indication for coming to the conclusion that the two lines of business are distinct and separate. Both related to grains which the assessees either purchased as ready stock or in respect of which they entered into forward contracts of sales and purchases with a view, if necessary to adjust the differences or to demand delivery according to the circumstances. One statement of fact in the judgment of the Appellate Tribunal needs amplification. It is stated by the Tribunal that in the year preceding the year of account the assessees did Satta speculation business in grains at Rangoon, and then follows the sentence "large quantities of grains were purchased and stocked in godowns and subsequently sold." If this statement were to refer to purchase and stocking of godowns at Rangoon even in respect of forward contracts, it is objected on behalf of the Income-tax Commissioner, that this is wholly incorrect and proceeds on an erroneous assumption. The Appellate Assistant Commissioner pointed out in his judgment on the basis of the statements filed by the assessees themselves that there were no godowns for stocking the goods at Rangoon, and that the assessees had not taken possession of the goods under the forward contracts. In view of this statement by the assessees themselves the sentence in the judgment of the Appellate Tribunal above quoted does not, in my opinion, relate to stocking of goods in godowns at Rangoon but relates only to goods stocked at Tuticorin and to ready purchases and not to forward contracts. In the statement of the case by the Appellate Tribunal this discrepancy was adverted to. In the light of the interpretation which I am inclined to place upon the sentence in the judgment of the Appellate Tribunal I think that there is no discrepancy, and the question will be considered and dealt with on that footing.