The Commissioner of Income Tax, Tamil Nadu II, Madras vs Mac Millan India Ltd., Madras

A.K. Rajan, J.—The assessee is a company. While completing the assessement 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% on its profits from publishing u/s 80

(QQ) 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 CIT(Appeals), following the decision of the Tribunal in assessee''s

own case for assessment years 1981-82 and 1982-83 directed the relief under Sec.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% 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 nonmanufacturing 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 80 QQ 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.