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TMI Blog1989 (6) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... be assessed in the hands of the assessee as 'business income' ? (2) Whether the finding of the Appellate Tribunal is a reasonable view to take on the facts and in the circumstances of the case ? (3) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the fees of Rs. 3,188 paid by the assessee to the approved valuer for valuing the studios of the assessee for the purpose of wealth-tax assessment was an allowable expenditure under section 37 of the Income-tax Act, 1961, and the same should, therefore, be allowed for the assessment year 1971-72 ? The assessee is an individual and he was, at the material time, the owner of the two film studios in Madras by name Vijaya Studios and V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out that whether a particular letting is business has to be decided in the circumstances of each case and in the setting and background of the facts, and that there is no such thing as a naturally born commercial asset because an asset becomes a commercial asset in view of the use to which it was put in a business and not because of any inherent qualities. Considering the many-sided career of the assessee in Mm business, as a producer, as a distributor, as an exhibitor, as a studio-owner and the like, it was held that on an overall consideration of these facts, the tax treatment to be accorded to the rental income had to be determined and the determination of the Tribunal based on the consideration of all the facts inclusive of the util ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceed to a consideration of the last question referred to us. Learned counsel for the Revenue submitted that since payment of wealthtax is not an allowable deduction and such payment has nothing whatever to do with the carrying on of businesses by the assessee, the expenditure incurred by the assessee in the matter of payment of fees to the approved valuer for valuing the studios cannot be regarded as an item of allowable expenditure under section 37 of the Act. On the other hand, learned counsel for the assessee submitted that the expenditure was incurred by the assessee for the preservation and protection of the business as well as the assets of the assessee from any proceedings which might have resulted in the reduction of his income an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It is true that, ordinarily, a business is carried on for the purpose of earning profits and not for payment of tax. However, it must be borne in mind that the earning of profits and the payment of taxes are not to be regarded as isolated and independent activities of a business, but are so interlinked, that they should be considered as continuous activities taking place from time to time during the whole period of the continuance of the business. This principle has been laid down in CIT v. Birla Cotton Spinning and Weaving Mills Ltd. [1971] 82 ITR 166 (SC). There, the question arose whether expenditure incurred by the assessee in connection with the conduct of proceedings before the courts in respect of proceedings initiated against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um of Rs. 1,00,000, that amount Will essentially become available for the purpose of business with a reasonable expectation of more profits. As was observed by Viscount Simon in Smith's Potato Estates' case [1949] 17 ITR (Suppl) [1948] 30 TC 267 , if the trader considers that the Revenue seeks to take too large a share and to leave him with too little the expenditure which the trader incurred in endeavouring to correct this mistake is a disbursement laid out for the purposes of his trade. If he succeeds, he will have more money with which to earn profits next year." We are of the view that the aforesaid considerations would be equally applicable to the expenditure incurred by the assessee in this case, which was for the purpose of contain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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