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TMI Blog1970 (3) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... ., 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 overhead expenses under the heads of salaries of general staff, provident fund, directorial expenses, managing agents' office allowance and managing agents' commission on net profit incurred by the assessee-company 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?" The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 agricultural activities of the assessee and as income from the agricultural activities was exempt from income-tax, that part of the expenses could alone be excluded. The Income-tax Officer, accordingly, disallowed a portion of the expenditure on an estimate basis. On appeal by the assessee, the Appellate Assistant Commissioner of Income-tax, relying on a decision of the Income-tax Appellate Tribunal in Maharas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, 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 or expended wholly and exclusively for the purpose of such business, profession or vocation". They have then examined whether rule 23 of the Indian Income-tax Rules, 1922, (which have been framed under section 59 of the Act), which, so far as relevant for our purpose, is in the following terms: "(1) In the case of income which is partially agricultural income as defined in section 2 and partially income chargeable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 shall be computed as if it were income derived from business, and 40 per cent. of such income shall be deemed to be income, profits and gains liable to tax", amply shows. Answering the further contention that the assessee should not be allowed to claim the amount paid to the managing agents as a commission as an allowable expenditure, because it would give to the assessee a double exemption, it relied on the decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in their entirety in computing the income of the assessee-company. (2) That, on the facts and in the circumstances of the case, the overhead expenses under the heads of salaries of general staff, provident fund, directorial expenses, managing agents' office allowances and managing agents' commission on net profit incurred by the assessee-company could not be apportioned between agricultural and business activities of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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