Deductibility of mixed business expenditure limited to taxable income; agricultural income costs cannot offset business receipts.

Agricultural income excluded from the Burma Income-Tax Act cannot be mixed with taxable business receipts for purposes of deduction under Section 10(2)(ix). The allowance for business expenditure is limited to expenses incurred solely to earn profits or gains chargeable under the Act, so outgoings attributable to agricultural receipts are not deductible against taxable business income. The court also rejected reliance on Section 12, holding that it did not expand the restricted scope of Section 10. The assessee was therefore denied deduction of expenditure incurred in earning agricultural income, and the reference was answered against the assessee.

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Issues: Whether, where a business yields both agricultural receipts excluded from the Act and taxable business receipts, the assessee may deduct against the taxable receipts the whole of the business expenditure including expenditure incurred for earning the agricultural receipts under Section 10(2)(ix).

Analysis: Agricultural income was held to fall wholly outside the scope of the Burma Income-Tax Act by reason of the statutory exclusions. The charge under the business head applies only to profits or gains of a business within the Act, and the allowance under Section 10(2)(ix) is confined to expenditure incurred solely for earning such taxable profits or gains. Expenditure attributable to earning agricultural income cannot be carried over and deducted from taxable business income. The argument based on the wording of Section 12 was rejected as not altering the limited scope of Section 10.

Conclusion: The assessee was not entitled to deduct expenditure incurred for earning agricultural income from the taxable business receipts. The question referred was answered in the negative, in favour of the Revenue.

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