TMI Blog1970 (3) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Indian Income-tax Act, 1922 (hereinafter referred to as "the Act"), at the instance of the Commissioner of Income-tax. The questions referred to us for decision are: "(1) Whether, on the facts and in the circumstances of the case, the overhead expenses under the heads of salaries and travelling expenses of general staff, general charges, legal expenses, postage, registration fee, etc., directors' fees and travelling expenses and managing agents' office allowance, incurred by the assessee could be apportioned between agricultural and business activities of the company and were not admissible as deductions in their entirety in computing the income of the company? (2) Whether, on the facts and in the circumstances of the case, the ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the following items: (1) Salaries of general staff. (2) Provident fund contribution. (3) Company's contribution to provident fund pertaining to staff and workers of estate department. (4) Expenditure on repairs and maintenance of agricultural buildings. (5) Registration, insurance and taxes on tractors and trailers. (6) Directorial expenses. (7) Managing agents' office allowances. (8) Managing agents' commission on net profits. The controversy between the department and the assessee related to the aforesaid items. The assessee claimed full deduction in respect of the aforesaid items. But, according to the Income-tax Officer, as only part of the expenses incurred in respect of the aforesaid items was attributable to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax v. Maharashtra Sugar Mills Ltd., has not been correctly decided and required reconsideration. He reiterated before us all the arguments which were urged on behalf of the department before the Bombay High Court and which, in our opinion, have been rightly answered in that judgment. The learned judges of the Division Bench of the Bombay High Court have held that where there is only one business of the assessee, namely, the manufacture of sugar (and not of cultivation of sugarcane), the expenditure which the assessee incurred for that business has to be allowed to the assessee under section 10(2)(xv) of the Act, being "any expenditure ......not being in the nature of capital expenditure or personal expenses of the assessee, laid out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds "further deduction" have been used with reference to the definition of "agricultural income" in section 2(1) of the Act; and as that definition emphasises the process ordinarily employed by a cultivator in raising crops and contemplates all the processes up to the stage of sale of those crops, the expression "further deduction" is referable to the expenditure incurred by the assessee as a cultivator. Thirdly, where the rules intended that any part of the income earned from agriculture should be treated as a business income, the rule expressly says so, as a comparison with the phraseology of rule 24, which is in the following terms: "Income derived from the sale of tea grown and manufactured by the seller in the taxable territories shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a cultivator, were not apportionable between the agricultural and business activities of the assessee-company, provided the business of the assessee was one and indivisible. In the result, we answer the reference in respect of the assessment years 1956-57 and 1957-58, respectively, as follows: (1) That, on the facts and in the circumstances of the case, the overhead expenses under the heads of salaries and travelling expenses of general staff, general charges, legal expenses, postage, registration fee, etc., directors' fees and travelling expenses and managing agents' office allowance incurred by the assessee could not be apportioned between agricultural and business activities of the assessee-company and were admissible as deductions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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