1987 (9) TMI 6

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....rtainment expenses and hence not allowable in view of section 37(2B) of the Income-tax Act, 1961 ? (2) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that a sum of Rs. 90,000 incurred by the company for obtaining a survey and feasibility report on the polythene plant is capital expenditure and not allowable as a business expenditure ? (3) Whether, on the facts and circumstances of the case the Tribunal was right in holding that surtax liability is not an expenditure allowable as a business expenditure and not an expenditure wholly and exclusively incurred for the purposes of its business ?" The relevant assessment year is 1974-75. The above-quoted questions Nos. (1) and (3) relating to the same as....

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....has to be answered have not been determined by any of the lower authorities including the Tribunal. The test to be applied for deciding whether this is an allowable expenditure or not was indicated by the Supreme Court in Setabganj Sugar Mills Ltd. v. CIT [1961] 41 ITR 272, as under (p. 274) : "The question whether, on the application of the settled tests, different ventures carried on by an individual or a company form the same business is a mixed question of law and fact. Certain principles are applied to determine whether on the facts found, a legal inference can be drawn that the different ventures constitute separate businesses or viewed together, can be said to constitute the same business. These principles were stated by Rowlatt J. ....