SRINIVASAN J.

The question that stands referred to us is :

"Whether on the facts and circumstances of the case the Appellate Tribunal was right in holding that the several activities of the assessee constituted one business for the purpose of assessment ?" *

The assessment year is 1951-52. The assessee is the owner of a brickworks and is also a partner in some other brick-works. Besides this business, he runs a ration shop, plies lorries for hire, owns a petrol bunk, derives income from various partnership concerns and in addition to all of these, engages himself in film distribution. For the assessment year in question no return was filed and the assessment was accordingly made under section 23(4) of the Act on an estimate. In the previous assessment year the assessee had incurred a loss of Rs. 92, 140 in film distribution and a loss of Rs. 41, 330 in the head office. The loss of that year was sought to be set off against the estimated income of the assessment year 1951-52 and that was disallowed by the Income-tax Officer. An appeal was taken to the Appellate Assistant Commissioner. The appellate authority held that the head office did not transact any separate business, being only a controlling office which supplied finance to the various activities of the assessee. The loss in the earlier year relating to the head office was mainly due to interest paid on loans and overhead expenses. The appellate authority thought that the loss allowable to be set off in this regard must be limited only to the payment of interest during the accounting year and accordingly allowed Rs. 20, 000 to be set off.

In dealing with the question of carry-forward the Appellate Assistant Commissioner took the view that

"the business of all the various activities are all carried on in the head office address where there is the controlling staff, telephone, etc. Having regard to those various aspects I agree that the various activities of the appellant other than the share in the partnerships constitute one business. The loss of the earlier years amounting to Rs. 68, 784 is, therefore, allowance in the assessment under appeal." *

Against this decision of the Appellate Assistant Commissioner the department carried an appeal to the Tribunal. While the Tribunal took not of the fact that there were separate sets of books for each of these individual activities of the assessee, all of them were controlled through the main cash book. The Tribunal stated :

"The fact that separate books of account had been opened for each activity should not by itself make each activity distinct and separate from each other not can we accept the proposition that a centralised cash control or single balance-sheet for all the activities, however different in nature, must indicate only one business." *

It rightly thought that each case had to be dealt with on its own peculiar facts. Without any detailed discussion however it proceeded to the conclusion that from the circumstances of the case it followed that all the activities of the assessee including Ratna Pictures (film distribution activity) constituted only one business and that the whole of the carry-forward of loss from the assessment year 1950-51 identifiable with Ratna Pictures was available to be set off against the total income computed for the assessment year 1951-52. The view taken by the Appellate Assistant Commissioner was accordingly confirmed.The question under reference was directed to be submitted by an order of this court on an application under section 66(2) of the Act by the commissioner of Income-tax.

The provision of the Indian Income-tax Act that calls for interpretation in the present case is section 24(2) which, so far as it was in force in the relevant assessment year, reads thus :

"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 31st day of March, 1940, in any business, professi