1993 (11) TMI 38

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....bunal was right in law in holding that the expenses have to be allocated in the same percentage as the different sources of income and are not to be allowed in entirety as allowed by the Commissioner of Income-tax (Appeals) after following decisions noted in paragraph 11 of the order dated January 31, 1985, for, the assessment years 1974-75, 1975-76 and 1980-81 ?" The brief facts of the case are that the assessee is a State Government-owned Corporation which derives its income from letting out of warehouses. It also earned income from interest and administrative charges for procurement of foodgrains which work was done by the assessee on behalf of the Food Corporation of India as well as the State Government. The various sources of incom....

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.... the assessee for allowing the entire expenses incurred in respect of all the categories of income was not allowed and the Income-tax Officer allowed the expenditure on proportionate basis for taxable and non-taxable income which was common to both the categories of income and the expenditure directly relating to warehousing charges was allowed in full. The appeal before the Commissioner of Income-tax (Appeals)-II was allowed and since the entire income was held by the appellate authority as exempt under section 10(29), the matter with regard to expenditure was not considered in the appeal so allowed. It may be noted that in respect of the appeals for 1974-75, 1975-76 and 1980-81, relying upon the decision of the Punjab and Haryana High Cou....

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....cumstances, it was considered proper to allocate the expenditure proportionately in relation to the various sources of income. The Tribunal has also observed that it has not been established that for earning the taxable income, the assessee had more expensive (sic) and, therefore, the appeal preferred by the Revenue was allowed. We have considered the matter. In a case where the entire business of the assessee is one and for earning the income from different sources, if no expenditure is incurred, then the position may be different, but, where for earning the income from different sources, expenditure has to be incurred, then the expenditure which is relatable to that income, which is taxable, is allowable under section 37. If the assess....