RAJAGOPALAN, J. - The question referred to this court under section 66(2) of the Income-tax Act ran :
'Whether on the facts and in the circumstances of the case, the inference of the Tribunal that the transaction in shares was a separate business is justified in law.'
The assessee carried on trade as a commission agent at Madras. Among the several trading activities of his, both in the relevant accounting year and the preceding years, was the purchase and sale of shares, which the Tribunal rightly characterised as a speculative business. He was not a share broker. For the accounting year preceding the assessment year 1947-48, his profits from his transactions in shares was computed at Rs. 13,272. He had sustained losses in the years preceding the relevant accounting year. After adjusting the losses sustained towards the profits computed for assessment in the assessment year 1947-48, there was still a balance of Rs. 8,321. The contention of the petitioner was that this sum of Rs. 8,321 should be adjusted towards his income from his other trading activities. That contention was negatived by the departmental authorities and by the Tribunal. The Tribunal held that under the provisions of section 24(2) of the Income-tax act, the assessee was not entitled to have this sum of Rs. 8,321 adjusted towards his other income, because his business in shares was a different business from that of the commission agency business which he had carried on. It is the correctness of this decision that has been challenged by the assessee before us.
It has been repeatedly laid down that the question whether for purposes of section 24(2) of the Act a given business is a separate business or is a part of the other business which the assessee carried on is essentially one of fact. (See K. S. Soundrapandia Nadar v. Commissioner of Income-tax, Madras). So, what we have to decide is whether the finding of the Tribunal, that the business that the assessee carried on in the purchase and sale of shares in the relevant accounting year was separate from his commission agency business, was one supported by the evidence placed before it. If there was evidence, the sufficiency of that evidence or other evidence contra will not justify a refusal to accept the finding of fact arrived at by the Tribunal.
Learned counsel for the assessee urged that the finding of the Tribunal that 'there was no nexus, inter-connection, inter-lacing or interdependence' between his business as commission agent and his business in the purchase and sale of shares was really not supported by the evidence on record. No doubt, the Tribunal observed that the facts it accepted were, that the assessee had no separate establishment, no separate place of business and no separate finance for is trading activities in the purchase and sale of shares. The Tribunal also accepted that the 'finances for both these activities of the assessee were derived from the same pool, that there was no separate establishment or expenditure, all these being interwoven.' That does not necessarily make the finding of fact, that there was no inter-dependence, one not based upon any evidence or contrary to the evidence which the Tribunal accepted. That the source, that is, the financial resources of the assessee, formed one common pool, from which he financed both sets of trading activities of his, would not necessarily lead to the inference that all through there was an inter-dependence or inter-lacing of the two sets of activities.
That the nature of the business which the assessee carried on in the purchase and sale of shares, that is, really dealing in future, was a relevant factor to be taken into account in deciding whether it constituted an item of business distinct and separate from the commission agency business which he carried on, cannot be disputed. If the Tribunal attached more importance to that relevant factor than to the other relevant factors which also it considered, it cannot be said that there was no evidence before the Tribunal on which the Tribunal could come to a conclusion, that the trading activities of the assessee in the purchase and sale of shares for himself constituted a business separate from the commission agency business which he carried on. Learned counsel for the assessee could not deny that the nature of the business in this case, distinct from the commission agency business, was a relevant factor to be taken into account in deciding whether the activities in the purchase and sale of shares was a business separate from the commission agency business.
The question is answered in the affirmative and against the assessee. The assessee will pay the costs of the respondent of this reference. Counsels fee, Rs. 250.
Reference answered in the affirmative.