TMI Blog1993 (10) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... te expenditure at 67 per cent. out of the income claimed under section 80P(2) of the Act for the overhead expenditure ? 3. Whether the Tribunal was correct in law in not allowing the entire expenditure under section 57 of the Act against the taxable income ?" The brief facts of the case are that the assessee has filed the return initially in which the deduction under section 80P of the Income-tax Act, 1961, was claimed on proportionate basis as the assessee was having income which was partly taxable and partly non-taxable. Subsequently, the said return was revised and the assessee claimed deduction from the gross amount of income, of the amount of income derived from its members without deducting therefrom proportionate administrative a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cent. Applying this 67 per cent. to the figure of Rs. 4,60,385, the figure of Rs. 3,10,253 was arrived at which was considered as expenses not liable to deduction under section 80P(2) of the Income-tax Act. It was not disputed that the income from the trucks and tractors was not exempt and other activity which was the main source of income, i.e., supply of fertilizers and agricultural implements to its members and marketing of agricultural produce was exempted. The staff which was employed by the assessee was looking after both the businesses, namely, the business of supply of fertilizers, agricultural implements, etc., to its members and carrying on the activity of running of the rice mill and deriving income from trucks and tractors. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members, the whole of the amount of profits and gains of business attributable to any one or more of such activities." From the above provision of law, it would be evident that the exemption which has been allowed under section 80P is in respect of income derived from various activities mentioned therein and not in respect of the gross receipt from any or all of the activities. The finding which has been recorded by the Income-tax Appellate Tribunal is that the assessee carried on separate businesses and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of Chapters IV and V of the Act where the assessee is having both taxable as well as non-taxable income, the total income which is exempted and for which the exemption is available under section 80P has to be arrived at. Similarly, the taxable income has to be determined. After determining the said incomes separately, the deductions which are available under Chapters IV and V have to be given to arrive at the gross total income as defined in section 80B(5). The income which is exempted under section 80P(2) has to be arrived at separately in order to determine the income under section 80P(2) and it can never be envisaged that the total income which has been so received could be allowed without deducting the expenditure incurred in earning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o application because a finding has been recorded by the Tribunal that the two businesses are not one, single and indivisible business, but are separate businesses. The running of the rice mill and deriving income from trucks and tractors are wholly independent from the other activities which are exempt under section 80P of the Act. The decision of the Gujarat High Court in the case of Sabarkantha Zilla Kharid Vechan Sangh, referred to above, was challenged by the assessee in the apex court and in C. A. Nos. 793, 795 of 1977 and C. A. Nos. 1549, 1551 of 1977, the judgment given by the Gujarat High Court was upheld and the special leave to appeal petition was dismissed. According to the decision of the Gujarat High Court, in computing the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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