Commissioner of Income Tax vs City of Ahmedabad Spg. and Mfg. Co. Ltd.

R.C. Mankad, Actg. C.J.

The Income Tax Appellate Tribunal (""the Tribunal"" for short) has referred to us, for our opinion, the following question :

Whether, on the facts and in the circumstances of the case, the sum of Rs. 25,519 was a proper deduction from the total income ?

The assessee is a company deriving income by way of licence fees'' from its house property. It also carries on a business in utilizing its weighing

machine. The assessment year under reference is 1977-78. The assessee has incurred expenditure of Rs. 31,519 claimed to have been incurred in

carrying on its business. So far as the house property was concerned, the assessee had separately shown the expenditure incurred by it. The

Income Tax Officer, however, held that the aforesaid expenditure of Rs. 31,519, deduction whereof was claimed from the business income, was

incurred both for the business and the house property. The Income Tax Officer estimated expenditure of Rs. 6,000 out of the said expenditure as

attributable to the assessee''s business. In other words, expenditure to the extent of Rs. 25,519 was attributable to the house property. In the

result, the Income Tax Officer disallowed expenditure of Rs. 25,519 in computing the assessee''s business income. The Appellate Assistant

Commissioner having confirmed the view taken by the Income Tax Officer, the assessee went in appeal before the Tribunal. The Tribunal,

following its earlier decision in the assessee''s case for the assessment year 1972-73, held that disallowance made by the Income Tax Officer

which was confirmed by the Appellate Assistant Commissioner was not justified. Accordingly, to it, there was no justification to make a departure

from the earlier view taken by it. The Tribunal, therefore, allowed the assessee''s appeal and deleted the disallowance of Rs. 25,519 in the

computation of the assessee''s business income. The Revenue was aggrieved by the decision of the Tribunal, and at its instance, the question set

out above has been referred to us, for our opinion.

We do not see any reason or justification to interfere with the view taken by the Tribunal. Whether or not the expenditure of Rs. 31,519 was

incurred for business is a question of fact. The finding recorded by the Tribunal is that the entire expenditure of Rs. 31,519 was incurred for

business. This finding of fact cannot be disturbed in this reference. It may further be pointed out that, so far as the house property is concerned, the

assessee had separately shown the expenditure incurred by it. We, therefore, fail to see how the expenditure of Rs. 31,519 could have been

treated as expenditure incurred both for business and for house property. There was no reason to disbelieve the assessee''s statement that the said

expenditure of Rs. 31,519 was incurred for business. That being the position, the assessee was entitled to deduction of the entire expenditure of

Rs. 31,519 in the computation of its business income. We, therefore, agree with the view taken by the Tribunal and answer the question which has

been referred to us for our opinion in the affirmative and against the Revenue. Reference answered accordingly with no order as to costs.