P L D 1969 Dacca 966 (PLP)

The learned Judge in that case reached the conclusion as he indicated above mainly on the ground that the registered firm was carrying business as merchant on the items on which it was engaged in speculations as well. In the case of Commissioner of Income‑tax, West Bengal v. The International Industries Ltd., Calcutta (22 I T R 44), it was held that if the assessee carried on a single business involving a number of activities, and dropped one of the activities during a year and pursued other activities in the following year, it would be said that the assessee was carrying on the same business. In the case of Setabganj Sugar Mills Ltd. v. Commissioner of Income‑tax, Central Calcutta (41 I T R 272), Supreme Court of India, reiterated the principle laid down by Rowlatt, J., in the case of Scales v. George Thompson & Co. Ltd., (13 Tax Cas. 83, 89), referred to the above and observed "The learned Judge also observed that what one had to see was whether the different ventures were so interlaced and so dovetailed into each other as to make them into the same business. These principles have to be applied to the facts, before a legal inference can be drawn that a particular business is composed of separate business, and is not the same one". It was further observed : "No doubt, findings of fact are involved, because a variety of matters bearing on the unity of the business have to he investigated, such as unity of control and management, conduct of the business through the same agency, the inter‑relation of the business, the employment of same capital, the maintenance of common books of account, employment of same staff to run the business, the nature of the different transactions, the possibility of one being closed without affecting the texture of the other and so forth. When, however, the true facts have been determined, the ultimate conclusion is a legal inference from proved facts, and it is one of mixed law and fact, on which depends the application of section 24(2) of the Act". In that case the question was whether the businesses in gunnies and manufacture of sale of sugar undertaken by the assessee company constituted the same business term occurring in section 24(2) of the Act. The High Court of Calcutta refused to direct the Tribunal to make a reference to the Court under section 66(2) of the Act, for, it was of opinion that the matter was concluded by the finding of fact arrived by the Tribunal to the effect that the aforesaid ventures constituted separate businesses. The Supreme Court of India, however, directed the High Court to call for a statement of the case and to dispose it of in accordance with the principle laid down above. In the case of Lakshmi Industries (Private) Ltd. v. Com missioner of Income‑tax, Madras (41 I T R 645), it was held that the assessee was entitled to carry forward and set off losses of earlier years against the income of the relevant year, although the assessee company which owned a rice and an oil mill manufactured ground nut‑oil and cake and sold them, leased the entire mill during the relevant year at a rental of Rs. 3,000 per month. The conclusion reached was on the ground that from the very fact that the entire manufacturing plant had teen leased out for a period, the assessee could not be said to have given up his business altogether and had no intention of resuming the business when favourable conditions offered themselves. The learned Judge observed: ‑ "The business of the assessee consisted in purchasing ground nut, expelling oil therefrom and selling oil and cake as the resultant products of the manufacture. The business accordingly included also the disposal of the products of the factory. There is clear evidence on record that during the relevant accounting year the assessee had a stock of a oil and ground‑nut, which he sold. The sales were, no doubt, riot of a large volume, but the fact remains that he did effect such sales. It would accordingly show that the assessee was still carrying on its business." Mr. Afzalul Haque points out that this case is distinguish able, for, in the instant case the vessel itself was sold out and the assessee claimed to carry forward and set off losses of earlier years after the sale of the vessel. Moreover, according to him, the jute brokerage business had no connection whatso ever with the carriage of goods by a vessel. In the case of Prithvi Insurance Co. Ltd. v. Commissioner of Income‑tax, Madras (52 I T R 238), it was held that the life insurance business and the general insurance business constituted the same business within the meaning of section 24(2) of the Act. Mr. Afzalul Haque rightly contends that insurance was an activity which inter‑laced the activities directed towards life and general policies. In both these cases the principle enunciated in the case of Scales v. George Thompson & Co. Ltd. (1928 L T 331), was referred to. In that case Rowlatt, J. observed : "I think this is a plain case. I am bound to say I do not think there is any question of law raised here, and, whether the question of law or question of fact, I certainly should not say:, the Commissioners were wrong. The Company carried on business of under‑writing. It also had a fleet of steamers. I cannot conceive two businesses that could be more easily separated than those two". The learned Judge held that the business of under‑writing and that of steamers were two separate businesses. The learned Judge laid down a principle in this behalf which has since been locus classicus when he observed : "I think the real, question is, was there any inter‑connection, any inter‑lacing, any inter dependence, any unity at all embracing those two businesses". Mr. Hossain and Mr. Afzalul Haque each in his turn has relied on this observation with equal emphasis and claimed that if the facts are scrutinised in accordance with this principle, it will support his case. From a reading of these decisions, it is clear that as to whether different activities carried on by the assessee constitute the "same business" within the meaning of that expression occurring in section 24(2) is essentially a question of fact, and the Court may however interfere if a palpably wrong view of the evidence is taken. In order to bring it within the purview of what has been called by Viscount Simonds: "a view on facts which could not reasonably be entertained", our attention is invited to the findings of the Tribunal to the effect that a number of circumstances indicate that two activities constituted the same business. The findings are mainly as follows: ‑ (1) Only one set of account was maintained for both the businesses viz. the broking business and the M. V. Ludlow operations. (2) Both the businesses were carried on from the same premises. (3) There was a common managerial staff. (4) Capital employed in the two businesses was the same. (5) Cash receipts went to the same fund and the financial arrangements and the banking accounts were common." Learned Advocate for the assessee, therefore, claims that these two activities constituted the "same business" as visualised under subsection (2) of section 24 of the Act. He invites our attention to the following comments of this Court while remanding the case by an order made on 3‑5‑65. "It will, therefore, appear that the assessee‑company fulfils many of the requirements for constituting the `same business'." It is, therefore, urged on behalf of the assessee that this Court practically held that the requirements for constitution of the "same business" have been fulfilled. We would only remind the learned Advocate that the expression "many of the require ments" does not mean all the requirements. We have yet to consider if all the requirements for constituting the "same business" have been fulfilled. It is urged by Mr. Hossain that the Tribunal would have found that all "the requirements" have been fulfilled if it would have considered the affidavit of Mr. Steward properly. It is further submitted that despite our directions that paragraphs 8 to 14, of the said affidavit should be considered, the Tribunal failed to consider paragraphs 9 and 13, dissatisfaction was expressed with consideration of other paragraphs as well. Pointed grievance was made about it in paragraph 9 of the said affidavit. Learned Advocate says that with regard to paragraph 5, the Tribunal stated. "As no corroborative evidence has been produced to show that when M. V. Ludlow arrived at Chittagong Port in December 1948, it also carried a cargo of coal for the baling plant, we are unable to express any opinion either way". It is, therefore, urged by Mr. Hossain that it is not necessary that there should be corroboration for each statement. The Tribunal ought to have stated as to whether or not the statement is accepted by it. This contention of learned Advocate does not take him very far. The onus of proving that the diverse activities con stitute the "same business" within the meaning of section 24(2) lies on the assessee, and if in the absence of such corroboration, D the Tribunal finds itself unable to express any opinion either way, it really means that the Tribunal failed to accept the contention of the assessee. The corroboration mentioned by Mr. Hossain is at page 6 of the additional paper‑book. It is Annexure C to the affidavit of Mr. Steward. It is a letter addressed by the assesses to one Mr. Malcolm B. Stone, in which it is stated: ‑ "On arrival at Narayanganj on the 4th January, the coal and conveyor were unloaded by head‑carriers within a couple of days and a complete check of all spare parts was made. The food and Mr. Peter Stone's own stores were also un loaded, the former being sold to the European families in Narayanganj. (The whisky is being brought down to Chengail bottle by bottle whenever representatives from this office have cause to visit Dacca)." We are unable to appreciate how this paragraph indicates a connection between the jute brokerage and maintaining the ship for the same purpose. Hossain also relies on a letter written to the said Mr. Malcolm B. Stone, addressed by Ludlow Jute Co. Ltd., and invites our attention to the following statement made therein "We shall of course also have to pay duty on the cargo of coal". This judgment goes against the contention of Mr. Hossain for it is stated therein that it carries cargo of coal. Next corroboration relied on by Mr. Hossain is at page 34 of the additional paper‑book. This is also a letter to Mr. Malcolm B. Stone, addressed by the assessee on 28‑12‑

48. This document also suffers from the comment we have made to the letter dated 28‑12‑

48. The passage therein is in the following terms: ‑ "In the meantime the vessel is proceeding .to Narayanganj to discharge her cargo of coal and the spare parts." Suffice it to say that we do not see any connection between the jute brokerage business and the carrying of cargo of coal and spare parts as mentioned in this passage. Our attention was next called to a letter addressed to Mr. Gavin P. Bryars, by Mr. Peter L. Stone. In that letter it is stated: "The reason for this is first,‑coal is very easily obtainable in Charleston, and second,‑by sending out coal, you would be able to use this direct for our baling operations at Narayanganj. We also hope by using coal to avoid the necessity of calling it a cargo." Mr. Afzalul Haque promptly points out that this does not corroborate the assessee and it supports the contention of the Revenue that this boat was initially brought to help the baling operation at Narayanganj and brokerage. The baling opera tions were given up completely even before the arrival of the vessel. Next corroboration sought to be derived is a passage occurring in a letter dated 24‑2‑49, addressed to Mr. Malcolm B. Stone by the assessee. This letter is at page 49 of the additional paper‑book and is in the following terms: "On arrival at Narayanganj on the 4th January, the coal and conveyor were unloaded by head carriers within a couple of days and a complete check of all spare parts was made." This passage does not lend any help to the assessee one way or other. In paragraph 13 of the said affidavit of Mr. Steward, it is stated "That after the cessation of the baling operations the vessel was used for carrying jute which the Company had broked and during the spare time the vessel also carried commodities on behalf of various concerns". Mr. Hossain submits that this statement has not been properly considered. We are unable to accept this contention. The Tribunal considered the salient features of the case and this paragraph has been clearly considered at page 3 of the paper book printed by the Tribunal after remand. The Tribunal says: ‑ "Mr. Zafar has submitted charts in support of his statement that the vessel made all told 17 trips out of which the first 11 trips were made for carrying jute broked by the company itself on payment of freight to it by the shippers and that it carried coal for others on the first 3 and the 11th trips. The Departmental Representative has pointed out that these charts show that vessel actually carried jute of other concerns during its last six trips during the period from 4th February 1952 to 16th May 1953 and carried food‑stuffs of the Civil Supplies Department during the return trips. In these circumstances, we are unable to accept the statement made in paragraph 13 that "during the spare time the vessel also carried commodities on behalf of various concerns". We have found as a matter of fact that the vessel stopped carrying jute broked by it after 27th October 1951 and that during the period commencing from 4th February 1952 right up to 16th May 1963, it was actually engaged in freight‑earning by carrying cargo for others." We are of opinion that the statement made by Mr. Steward in paragraph 13 has been fully considered. The chart referred to therein was also placed before us by Mr. Hossain and on a perusal thereof, we find no reason whatsoever to say that an improper view of the said chart was taken by the Tribunal. Mr. Huq, however, relies on paragraph 13 as already stated, in order to claim that it establishes that it was a separate business altogether and not an integral part of the jute broking business. This contention of Mr. Huq is founded on an observation made by a Division Bench of this Court in the case of Commissioner of Income‑tax, Dacca Zone, Dacca v. Amin Jute Baling Co. Ltd., Dacca (P L D 1969 Dacca:687) In that case it was observed "If, however, the assessee undertakes, as suggested by learned Advocate for the Commissioner, insurance of goods of other persons the character of the agency in that case would definitely change and it would in that case be separate and distinct business." In that case the assessee insured its own jute as an agent of the Queensland Insurance Co. and this Court accepted the position that the step was in furtherance of its own business, for, it was only a different activity for reducing the expenditure incurred for its jute business and it was made clear in that passage that if the assessee would have insured the jute of others, it would be a separate business altogether. In the present case Mr. Afzalul Haque rightly points out, on the assertion made on behalf of the assessee itself, that it was carrying coal and food stuff and jute of others, and, it was, therefore, a separate business. We are of opinion, that the case referred to above supports the contention of Mr. Huq and not of Mr. Hossain who also places reliance on that decision. Mr. Hossain urges that the vessel was not a public carrier and as such it was not a separate business, but whether a public carrier or not, it has, in fact, been used for carrying goods of others. That being so, it is clearly a separate business as was held in the case of Amin Jute Baling. On a consideration of the materials before us, We are of opinion, that the maintaining a vessel was a different venture altogether. No dovetailing or interlacing between maintaining a vessel and the jute brokerage business can be discerned. The Tribunal has, therefore, rightly hold that these were two separate and distinct businesses. For the reasons stated above, the question referred to us is answered in the affirmative. In the facts and circumstances of the case we make no order as to costs. NURUL ISLAM, J.‑I agree. Question answered in the affirmative.