Hegde, J. - (1.) These are appeals by special leave. They are directed against the decision of the High Court of Allahabad in a reference under Section 66 (1) of the Indian Income Tax Act 1922 (to be hereinafter referred to as the Act). The common question of law referred in these appeals was:"Whether the tax paid by the assessee company on the tea-garden lands under the U. P. Large Land Holdings Tax Act, 1957 (U. P. Act XXXI of 1957) is liable to be deducted under Section 10 (2) (xv) -.
(2.) The High Court answered this question in favour of the Revenue. It did so following the decision of this Court in Travancore Titanium Product Ltd. v. C.I.T. Kerala, 60 ITR 277 .
(3.) It may be noted that the assessee companies (there are two companies) are taxed under Section 10 of the Act. Their income is considered as business income. The assessee companies are tea-growers and the activity they carry on is a business activity. Therefore, the question is whether the tax paid by them under the U. P. Act XXXI of l957 is an item of expenditure coming within the scope of Section 10 (2) (xv) of the Act. In Indian Aluminium Co. Ltd. v. Commr. of Income Tax, West Bengal, 84 ITR 735 a Five-Judge Bench of this Court modified the decision of this Court in Travancore Titanium Products case (supra) holding that if the expenditure laid out by the assesses is as an owner-cum-trader and the expenditure is really incidental to the carrying on his business it must be treated to have been laid out by him as a trader and as incidental to his business. On the basis of that rule it came to the conclusion that the wealth tax paid by a trader on his business assets is liable to be deducted under Section l0 (2) (xv) of the Act. Applying the ratio of that decision to the facts of the present case it is clear that the lands owned by the assessee companies are its business assets and the tax paid thereon under the U. P. Act XXXI of 1957 is an item of expenditure laid out by the assesses companies as traders and. as incidental to their business. Consequently the same must be treated as an item of expenditure under S. 10 (2) (xv) of the Act.;