1. In this reference under Section 256(1) of the I. T. Act, 1961, we are concerned with the question as to whether the assessee is eligible for adjustment of losses brought forward from the earlier years. The reference relates to the assessment years 1962-63 and 1963-64. The preceding financial years are the previous years.
2. The assessee is a company. The company carries on business in raising coal from mines taken on lease. It also derives income by acting as agent for purchase and sale of coal. The purchase of coal was regulated by permits and the permits were issued only to actual users. The company was a dealer and not a user of coal and, accordingly, it could not effect any purchase. In these circumstances, the company entered into commission agency transactions from which it earned commission. The said agency also enabled the company to sell coal to its customers.
3. The company suffered losses in the accounting years 1958 to 1960, which were ascertained by the ITO after taking into account its colliery and the commission activities together. The ITO has disallowed the company's claim to set off those carried forward losses against the profits earned as commission in the assessment years 1962-63 and 1963-64 inasmuch as the assessee has discontinued its coal raising activity which, according to the ITO, is a different business from the existing business in the assessment years concerned.
4. The appeals filed by the company were dismissed by the AAC. The Tribunal has allowed the second appeals filed by the company by holding that the company has carried on one and the same business in all these years. It has been held by the Tribunal as follows:
'In the present case, the commodity dealt with is the same. Coupled with the subordiate factors of common financing, common staff and common accounting, there is a very important circumstance, viz., that the commodity dealt with is only one, i.e., coal. This provides, in our opinion, the dominating nexus between the two lines of activities. We are satisfied that the two lines of activities were merely parts of an integrated trade or business.....We have to take the lines of activities of a single business as a whole. If we do so, the fact that the loss was suffered in one part rather than the other will not be really material.'
5. With the above findings, the Tribunal has referred the following question at the instance of the department to this court:
'Whether, on the facts and in the circumstances of the case, the business activities of the assessee, viz., the coal raising from mines taken on lease and acting as agents in the purchase and sale of coal on commission constituted part of one integrated trade or business so as to justify the set-off of losses, brought forward from 1958-59 to 1960-61 in the assessment under reference under Section 72 of the I. T. Act, 1961 ?'
6. By relying on the decision of a Division Bench of this court in the case of Mundulpoor Coal Co. v. CIT 0043/1965 : 58ITR199(Cal) , it has been contended before us by Mr. Ajit Sen Gupta, the learned counsel for the revenue, that the company did not carry on the same business in all these years and, therefore, the company was not entitled to set off the carried forward losses of the earlier years against the profits of the relevant years. But we are not impressed by his contention.
7. In the case cited by him, the assessee closed its previous business and thereafter started a new business and, therefore, it was held that the assessee was not entitled to set off the losses of the earlier years with the profits of the relevant year. Hence, this case has no bearing on the question involved before us in view of the above findings of the Tribunal.
8. In our opinion, the tests laid down by the Supreme Court on 'one and the same business' in the cases of Setabganj Sugar Mills Ltd. v. CIT : 41ITR272(SC) , CIT v. Prithvi Insurance Co. Ltd. : 63ITR632(SC) , Hooghly Trust (P.) Ltd. v. CIT : 73ITR685(SC) , Produce Exchange Corporation Ltd. v. CIT : 77ITR739(SC) and Standard Refinery and Distillery Ltd. v. CIT : 79ITR589(SC) have been fulfilled in the instant case before us by the company in view of the above findings of the Tribunal, and, accordingly, we return our answer in the affirmative and in favour of the assessee.
9. There will be no order as to costs.
Dipak Kumar Sen, J.
10. I agree.