Syed Shah Mohammed Quadri, J. - (1.) This appeal arises from the judgment and order of the Division Bench of the High Court of Judicature for Rajasthan Bench at Jaipur in Income-tax Reference No. 86 of 1987 dated November 9, 1993. The assessee is the appellant.
(2.) By the order under challenge the High Court answered the following question, referred to it under Section 256(1) of the Income-tax Act, 1961 (for short 'the Act'), in the affirmative, that is, in favour of the Revenue and against the assessee: "Whether on the facts and in the circumstances of the case and the business of the assessee being one and indivisible, the Tribunal was right in law in holding that the expenses have to allocated in the same percentage as the different sources of income and are not to be allowed in entirety as allowed by the Commissioner of Income-tax (A) after following decision noted in para 11 of the order dated 31.01.1985 for the assessment year 1974-75, 1975-76 and 1980-81 -
(3.) In the assessment year 1977-78 the appellant, a State Government Corporation, derived its income from interest, letting out the warehouses and administrative charges for procurement of foodgrains while working for the Food Corporation of India as well as the State Government. It claimed deduction of expenditure of Rs. 38,13,555.17 under Section 37 of the Act in computing its income under the head 'profits and gains of business or profession.' The Income-tax Officer allowed only so much of the expenditure as could be allocated to the taxable income and disallowed the rest of it which was referable to the non-taxable income, being exempt under Section 10(29) of the Act. On appeal, the Commissioner of Income-tax (Appeals)-II accepted the claim of the appellant that the entire expenditure was deductible. The Revenue's appeal thereform to the Income-tax Appellate Tribunal was allowed upholding the order of the Income-tax Officer on July 17, 1986. At the instance of the appellant the question noted above was referred to the High Court. By order under challenged the High Court confirmed the order of the Income-tax Appellate Tribunal. Hence this appeal.;