MAKHANLAL RAM SWARUP Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a case stated under section 66(1) of the Income-tax Act, 1922, by the Income-tax Appellate Tribunal. The question referred is :

(2.) THE material facts are these. THE assessee is an individual. During the relevant year of assessment, which is the assessment year 1956-57, the previous year being the year ended Bhadon Sudi 2, Sambat 2012, carried on business in speculation and money-lending at Agra in the name of Makhan Lal Ram Swarup, hereinafter referred to as head office. He also carried on another business under the name and style of Messrs. S. D. Gupta & Co., hereinafter referred to as the branch, in which the business was confined to speculation business alone. THE assessee kept only one account for expenses incurred in the head office and branch business carried on in the aforesaid names.

(3.) THE only objection taken by the assessee was to the addition of Rs. 3,000 as estimated expenses in respect of the speculation business at the head office. THE contention was that where an assessee is carrying on a single business, and a part of the profits of the business is not liable to tax, the deduction of expenses of the business should be allowed in its entirety although a part of the expenses may have been incurred for earning non-taxable profits. This contention was repelled by the Income-tax Officer, who considered that the assessee was in fact carrying on two businesses, one in money-lending and the other in speculation and, as none off these two businesses were exempt from taxation, the expenses would necessarily have to be reasonably apportioned. THE Appellate Assistant Commissioner deleted the addition of Rs. 3,000 on the ground that section 10(2)(xv), which is the only section, accordingly to him, under which a claim for business expense could be deleted or curtailed did not envisage separate expenses for each different business.