Sabyasachi Mukharji, J. - (1.) In the order of the Tribunal it was observed as follows : " If we look into the facts of the present case we find that the facts are almost identical except with the difference that in the case before us the assessee is not growing tea on the lands lying fallow but it is raising some other crops. But we do not think that this fact would have any material bearing in regard to the principles laid down by their Lordships of the Supreme Court. The assessee's activity of raising tea, selling tea and also the activity of raising paddy and other crops on the fallow land for the time being constituted an indivisible business. The accounts are all consolidated and the management is the same. There is no separate activity as such. All constitute a single activity. In such a situation, there can be no manner of doubt that the indirect expenses which are incurred in the head office and the branch office relating to the whole "activity will have to be allowed in full without bifurcating a portion on the ground that a portion is relatable to agricultural activity and, therefore, disallow-able. Applying the above principles, we have no hesitation to hold that the Income-tax Officer went wrong in disallowing a portion of the indirect expenses on the ground that portion relates to the agricultural activity of the assessee. It may be mentioned here before concluding this issue that the assessee accounted for the income arising from other agricultural products in its profit & loss a/c for all these years under appeal and they formed the subject-matter of computation of income of the assessee read with Rule 1 of the Income-tax Rules. It is not the case of the Revenue that the income in respect of the products other than the tea is not includible for the purpose of computation of income of the assessee in accordance with Rule 8 of the Income-tax Rules. There is thus no question of disallowing a further portion of indirect expenses as was done by the ITO for the years under appeal. We, accordingly, hold that no part of the indirect expenses could be disallowed. But we are told by Mr. Bajoria very fairly that the amount of land Revenue relating to the particular land will have to be disallowed as payment of land Revenue is a direct expenditure connected with agriculture. Following are the amounts of land Revenue which are to be disallowed : JUDGEMENT_517_ITR141_1983Html1.htm
(2.) On this the Revenue wanted a reference and that application was refused by the Tribunal, Then the Revenue made an application under Section 256(2) of the I.T. Act, 1961, to this court suggesting the following two questions : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal had no evidence or had relied on irrelevant or partly irrelevant materials in holding that the assessee's activities of growing and manufacturing tea and those of growing paddy, jute and other crops constituted an indivisible business and/or whether such finding of the Tribunal was otherwise unreasonable or perverse ? 2. Whether, on the facts and in the circumstances of the case, and on a correct interpretation of Rule 8 of the Income-tax Rules, 1962, the Tribunal was correct in law in holding that no part of the indirect expenses could be disallowed in computing the assessee's income liable to income-tax?"
(3.) The court issued a Rule nisi on the following question : " 3. Whether, on the facts and in the circumstances of the case, and on a correct interpretation of Rule 8 of the Income-tax Rules, 1962, the Tribunal was correct in law in holding that no part of the indirect expenses could be disallowed in computing the assessee's income liable to income-tax ? ";