Commissioner of Income Tax vs Mac Millan India Ltd.

A.K. Rajan, J.

The assessee is a company. While completing the assessment for the year under consideration, the assessing officer allowed a deduction of Rs. 3,25,140 as against Rs. 8,55,037 claimed by the assessee as deduction at 20 per cent on its profits from publishing u/s 80QQ of the Act. The assessing officer held that according to the allocation of income between the three activities carried on by the assessee, the result from trading in books was a loss of Rs. 39,85,365 and that deduction was admissible only on the net business income and not on the net income of publishing activity only as claimed by the assessee. On appeal, the Commissioner (Appeals), following the decision of the Tribunal in assessee''s own case for assessment years 1981-82 and 1982-83 directed the relief u/s 80-OO should be granted without deduction the loss in the trading in books. On further appeal by the revenue, Tribunal dismissed the same. Under the circumstances the question referred to us is,

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee is entitled to deduction u/s 80-OO at the rate of 20 per cent on the total profits derived from the business carried on in India and not on the net income after setting off the loss of the non-manufacturing division?"

With respect to the same assessee similar issue had been decided by this court in the case reported in Commissioner of Income Tax Vs. Macmillan Co. of India Ltd., wherein this court held that while the assessee had made a profit in the business of printing and publishing, it had suffered a loss in its business of trading. The loss incurred in the latter business was required to be set off against the profit earned in the business of printing and publishing before arriving at the gross total income of the assessee under the head "Business". Therefore, the deduction u/s 80QQ was required to be made with reference to the gross total income so calculated and not by excluding the loss suffered in the trading activity which admittedly was one of the business carried on by the assessee.

In the circumstances, the question referred is answered in favour of the revenue and against the assessee.