Hegde, J. - (1.) This is an appeal by special leave. It arises from the decision of the Bombay High Court in Income-tax Reference No. 83 of 1962 on its file. That reference was made by the Income-tax Appellat v. Tribunal, Bench 'B', Bombay. The question of law which was referred for the opinion of the High Court under Section 66 (1) of the Income Tax Act, 1922 (to be hereinafter referred to as the Act) is:-"Whether on the facts and in the circumstances of this case the Department could disallow a sum of Rupees 1,26,359/- a portion of the managing agency commission paid by the assessee company for the assessment Year 1957-58 in computing the income from business of the assessee company."
(2.) The assessee is M/s. Maharashtra Sugar Mills Ltd. The concerned assessment year is 1957-58 the corresponding account year ending on 30-9-1956. The assessee is a Limited Company. It carries on business of manufacture of sugar from sugar cane. It owns extensive lands in which sugar cane is grown. The sugar cane grown in these lands is used by the assessee for manufacture of sugar in its factory. The finding of the Tribunal is that the cultivation of sugar cane and the manufacture of sugar by the assessee constitute one single and indivisible business. The assessee company is managed by managing agents. The managing agents were paid remuneration in accordance with the agreement entered into between the assessee company and the managing agents. The managing agents commission roughly worked out at 10 per cent of the profits of the company. In the assessment year in question the managing agents were entitled to a commission of Rs. 4,86,228/6/ in its assessment proceedings, the assessee claimed deduction of this sum under Section 10 (2) (15) as an item of expenditure laid out or expended wholly or exclusively for the purpose of its business. Out of that sum, the Income-tax Officer disallowed a sum of Rupees 1,26,359/- on the ground that the same relates to the commission of the managing agents for managing the sugar cane cultivation part of the business. In appeal the Appellate Assistant Commissioner concurred with the view taken by the Income-tax Officer. The assessee took up the matter in second appeal to the Income-tax Appellate. 'Tribunal. The Tribunal upheld the plea of the assessee that the entire sum is deductible under S 10 (2) (15) It also rejected the contention of the Department that on the facts of the case Rule 23 of the Rules framed under the Act is applicable. In the reference referred to earlier, the High Court agreeing with the view taken by the Tribunal answered the question in favour of the assessee Hence this appeal.
(3.) The finding of the Tribunal that the cultivation of sugar cane as well as the manufacture of sugar constitutes one business is a finding of fact. That finding has not been challenged before us. What was urged on behalf of the department is that the assessee's business consisted of two parts namely (1) cultivation of sugar cane and the manufacture of sugar. The former part being agricultural operation, the income therefrom is not exigible to tax and therefore any expenditure incurred in respect of that activity is not deductible. This contention proceeds on the basis that only expenditure incurred in respect of a business activity giving rise to in come, profit or gains taxable under the Act can be given deduction to and not otherwise. We see no basis for this contention. To find out whether a deduction claimed is permissible under the Act or not, all that we have to do is to examine the relevant provisions of the Act. Equitable considerations are wholly out of place in construing the provisions of a taxing statute. We have to take the provisions of the statute as they stand. If the allowance claimed is permissible under the Act then the same has to be deducted from the gross profit. If it is not permissible under the Act, it has to be rejected. As mentioned earlier, it is not disputed that the cultivation of sugar cane and the manufacture of sugar constituted one single and indivisible business. Section 10 (2) says that profits under Section 10 (1) in respect of a business should be computed after deducting the allowances mentioned therein. One of the allowances allowed is that mentioned in Section 10 (2) (15) which says that any expenditure laid out or expended wholly and exclusively for the purpose of such business shall be deducted as an allowance. The mandate of Section 10 (2) (15) b plain and unambiguous. Undoubtedly the allowance claimed in this case was laid out or expended for the purpose of the business carried on by the assessee. The fact that the income arising from a part of that business is not exigible to tax under the Act is not a relevant circumstance. For the foregoing reasons we agree with the view taken by the High Court.;