Income-tax deductions and allowances must relate to the assessee's own business operations, not profit distribution or another concern.

Extra shift allowance was confined to the proportion of the period during which machinery actually worked double or triple shifts, so full allowance was not admissible. The assessee's share of loss from an unregistered firm could not be set off against its own business income, and the earlier adverse view was followed. A reasonable portion of common establishment and management expenses was disallowed because it related to another concern and not solely to the assessee's business. Legal expenses over distribution of profits in specie were also disallowed, as post-earning profit distribution is not expenditure wholly and exclusively for business purposes.

---

---

Issues: (i) Whether the assessee was entitled to full extra shift allowance; (ii) whether the assessee's share of loss from an unregistered firm could be set off against its other business income; (iii) whether disallowance of a portion of establishment and management expenses attributable to another concern was valid; and (iv) whether disallowance of legal expenses incurred in proceedings concerning distribution of dividend in specie was valid.

Issue (i): Whether the assessee was entitled to full extra shift allowance.

Analysis: The machinery worked extra shifts only for part of the relevant period. Under Rule 8 of the Indian Income-tax Rules, 1922, the extra allowance for double or triple shift working is linked to the normal working days taken as 300 days, and the allowance must be scaled down proportionately to the actual number of days worked. The court followed the earlier view that full allowance is not admissible irrespective of the period of extra-shift working.

Conclusion: The issue was answered against the assessee.

Issue (ii): Whether the assessee's share of loss from an unregistered firm could be set off against its other business income.

Analysis: The court noted conflicting authorities on the set-off of a partner's share of loss from an unregistered firm against personal business income. It treated the issue as concluded against the assessee by its earlier decision and by the Full Bench of the Allahabad High Court, which had also proceeded on the refusal of special leave by the Supreme Court in the connected litigation. On that basis, the court declined to reopen the question.

Conclusion: The issue was answered against the assessee.

Issue (iii): Whether disallowance of a portion of establishment and management expenses attributable to another concern was valid.

Analysis: The expenses were found to relate in part to the business of the unregistered firm, not solely to the assessee's own business. A deduction is allowable only for expenditure incurred for the purposes of the assessee's business, and not for the business of another entity. The attribution of a reasonable portion of the common expenses to the other concern was therefore justified.

Conclusion: The issue was answered against the assessee.

Issue (iv): Whether disallowance of legal expenses incurred in proceedings concerning distribution of dividend in specie was valid.

Analysis: The litigation concerned the mode of distribution of profits already earned and did not relate to carrying on the business, earning profits, or protecting the business apparatus. Expenditure incurred for the purpose of distributing profits after they have been earned is not expenditure laid out wholly and exclusively for the purposes of business.

Conclusion: The issue was answered against the assessee.

Final Conclusion: All the referred questions were decided adversely to the assessee, with the result that the revenue succeeded on every substantive issue.

Ratio Decidendi: Allowances and deductions under income-tax law are confined to expenditure or reliefs attributable to the assessee's own business operations, and not to expenses or claims relating to the business of another entity or to the post-earning distribution of profits.

---