1997-VIL-251--DT

Equivalent Citation: [1998] 232 ITR 718

HIMACHAL PRADESH HIGH COURT

Date: 14.05.1997

LAHAUL POTATO GROWERS CO-OPERATIVE MARKETING PROCESSING SOCIETY LTD.

Vs

COMMISSIONER OF INCOME-TAX

BENCH

Judge(s)  : M. SRINIVASAN., A. L. VAIDYA 

JUDGMENT

3. It is seen from the order of the ITO itself that the assessee has been engaged in activities which cannot be said to be incidental or ancillary to the commission business in potatoes. It is seen that the assessee has been using four trucks as public carrier. Besides the assessee has used certain premises owned by it as godowns and collected the rent from the persons, who had taken such godowns on lease. The various heads of the assessee's income are categorised as follows :

(a) Salaries ;

(b) Interest on securities ;

(c) Income from house property ;

(d) Profits and gains of business or profession ;

(e) Capital gains ; and

(f) Income from other sources.

By bringing the income of the assessee under the different heads, it was found by the ITO as well as the appellate authority that the incomes were mutually exclusive and it is not a case of one activity depending on another for the purpose of being continued.

4. Learned counsel for the assessee places reliance on the judgment of the Supreme Court in CIT vs. Maharashtra Sugar Mills Ltd. 1973 CTR (SC) 489 : (1971) 82 ITR 452 (SC) : TC 16R.644. The assessee in that case was carrying on business of manufacture of sugar from sugarcane. It owns extensive lands in which sugarcane was grown. The sugarcane grown in those lands was used by the assessee for manufacture of sugar in its factory. The Tribunal has found as a fact that the cultivation of sugarcane and the manufacture of sugar by the assessee constituted one single and indivisible business. It was on the basis of such finding of fact that the Court considered the question as to whether the commission paid to the managing agents was exempt from taxation. The facts of the case are thus different from the present case and the principle laid down in that case will not apply in this case.

Learned counsel invites our attention to the judgment of the Punjab and Haryana High Court in Punjab State Co-operative Supply and Marketing Federation Ltd. vs. CIT (1980) 18 CTR (P&H) 71 : (1981) 128 ITR 189 (P&H) : TC 16R.658. There again the question was considered on the basis of the categorical finding of fact arrived at by the Tribunal that the entire business of the assessee was indivisible. Hence, that ruling will not help the petitioner herein. Learned counsel for the assessee draws our attention to the judgment of the Supreme Court in Broach Distt. Co-operative Cotton Sales, Ginning and Pressing Society Ltd. vs. CIT (1989) 77 CTR (SC) 70 : (1989) 177 ITR 418 (SC) : TC 26R.657 and contends that the taxation statute must be given a liberal interpretation. But on the facts of the case, it is found by the Court that the entire business of ginning, pressing and marketing was comprised in one activity and, therefore, the profits and gains derived from such activity were exempted under s. 81(i)(c) of the IT Act. The general observations made by the Court will not help the assessee in the present case in view of the finding of fact arrived at by the authorities concerned.

Our attention is drawn to the judgment of the Supreme Court in Waterfall Estates Ltd. vs. CIT (1996) 219 ITR 563 (SC). While pointing out that no single test can be devised as universal and conclusive in order to determine whether various activities constitute the same or separate business, the Court held that the question has to be decided on a consideration of all the relevant facts and circumstances. The Court said that some facts may tend one way and some others the other way and an overall view has to be taken and a conclusion arrived at. It is also observed that even if it is found that one or two circumstances among the several circumstances relied upon are not relevant, the finding of fact recorded by the Tribunal cannot be interfered with if there are other relevant circumstances, which sustain the finding.

5. In this case, we find that the Tribunal as well as the other authorities have concurrently found that there are different activities which do not depend upon one another. Hence, the view taken by the Tribunal that the decisions referred to by the assessee, namely, Maharashtra Sugar Mill's case (supra), and that of the Punjab & Haryana High Court in Punjab State Co-operative Supply and Marketing Federation's case (supra), are not applicable in this case is correct. Consequently, the Tribunal is right in law in holding that the deduction under s. 80P(2)(a)(iii) is to be allowed against the net income after setting off proportionate expenses for earning the exempt income where such expenses are mixed up with the remaining expenses. There is no dispute as regards the working out of the net income on the basis of the rule of proportion applied by the ITO. Hence, we answer the question referred to us in the affirmative and hold that the Tribunal was right in law in taking that view.

 

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