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TMI Blog1996 (4) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... eals ; only the assessment years are different. The following three questions were referred for the opinion of the High Court under section 256(1) of the Income-tax Act : (at page 224 of 131 ITR) : " (1) Whether, on the facts and in the circumstances of the case, the conclusion of the Appellate Tribunal that the entire managing agency commission claimed and shown in the accounts was not allowable as a deduction for the assessment year 1965-66 as per the ratio of the decision in CIT v. Maharashtra Sugar Mills Ltd. [1971] 82 ITR 452 (SC), is valid in law ? (2) Whether, on the facts and in the circumstances of the case, the decision of the Appellate Tribunal that for the assessment year 1965-66 the various lines of activity like tea estate, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... office expenses and then apportion the head office expenses including managing agency commission between the three categories of income, viz., wholly taxable income, partially taxable income (from the tea estates) and wholly exempted income (from the coffee estates) in the proportion of the expenditure incurred on the respective activities. With effect from the assessment year 1964-65, however, the assessee changed its method of arriving at the net income. It worked out its taxable income from the tea business by deducting 10 per cent. of the total profits from the tea business on account of managing agency commission. The method of accounting adopted by it has been set out in detail in the statement of the case and the judgment of the Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey represent distinct businesses. The question of this nature, it is evident, is essentially a question of fact. The statement of the case drawn up by the Tribunal summarises its findings in the following manner : "(a) the various estates and the coffee curing works exist at different places and in so far as the assessee was concerned they were acquired at different times. They are independent and closure of one would not affect the continuance of another ; (b) each estate has its own subsidiary accounts and is managed locally although overall the head office controls all the estates and maintains a single profit and loss account ; (c) there are separate staff for the various estates and even for tea and coffee estates in Waterfall Est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... htra Sugar Mills Ltd. [1971] 82 ITR 452 in support of his contention. So far as Maharashtra Sugar Mills [1971] 82 ITR 452 (SC), is concerned the factual findings therein are entirely distinct and different. In that case it was found by the Tribunal "that the cultivation of the sugar cane as well as the manufacture of the sugar constitute one business" and that finding was not challenged by the Revenue before this court. It was contended all the same that the assessee's business consisted of two distinct parts. It was this contention which was rejected. The said decision is therefore clearly distinguishable in the light of the facts found in the present case. Mr. Ramachandran then relied upon the decisions in CIT v. Prithvi Insurance Co. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her factors -- apart from what are pointed out as irrelevant (assuming for the sake of argument that they are irrelevant) -- to support the finding of the Tribunal. Mr. Ramachandran also. relied upon the decision in CIT v. Indian Bank Ltd. [1965] 56 ITR 77 (SC). The appellant therein was a banking company, which invested, in the course of its business, a large sum in securities including securities the interest from which was exempt from tax. While computing the business income of the assessee, profits and losses on the purchase and sale of all such securities were duly taken into account. The contention of the Revenue was that where a part of the profits of a business is not taxable, the expenditure incurred for earning those profits cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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