Case: M/S. Waterfall Estates Ltd.Madras Vs. The Commissioner Of Income-Tax, Tamil Nadu I, Madras

Officer to work out the details. Thereupon the assessee applied for and obtained the reference under Section 256(1)3. The issue arising from Questions 1 and 2 in short depends upon the answer to the question - whether the various activities being carried on by the appellant-assessee constitute one single integrated activity or do they represent distinct businesses. The question of this nature, it is evident, is essentially a question of fact. The statement of the case drawn up by the Tribunal summarises its findings in the following manner"(a) the various estates and the coffee curing works exist at different places and insofar as the assessee was concerned they were acquired at different times. They are independent and closure of one would not affect the continuance of another;(b) each estate has its own subsidiary accounts and is managed locally although overall the head office controls all the estates and maintains a single profit and loss account;(c) there are separate staff for the various estates and even for tea and coffee estates in Waterfall Estate separately;(d) the various estates are far-flung and not in one place; the characters of the business ventures in the various estates are different;(e) apart from the existence of a centralised management and head office where a single set of final accounts is maintained there is no evidence relating to interlacing, interconnection and interdependence of the various estates in the day-to-day affairs or of their functioning being dovetailed into one another." * 4. It is on the basis of the above findings that the Tribunal held that the several activities carried on by the appellant-assessee constitute separate and distinct activities. On reference, the High Court has agreed with the Tribunal and answered the said questions in favour of the Revenue and against the assessee. We are of the opinion that on the findings recorded by the Tribunal, the High Court was justified in rejecting the assessees contention5. Shri Ramachandran, the learned counsel for the appellant, however, contended that some of the tests applied by the Tribunal are erroneous, which has vitiated its finding. In particular, the learned counsel submitted that the circumstance that closure of one unit would not affect the activities of the other units is not at all a relevant consideration. Similarly, the fact that the several units were acquired at different points of time is said to be equally irrelevant. He strongly relied upon certain decisions including the decision of this Court in CIT v. Maharashtra Sugar Mills Ltd. in support of his contention 6. So far as Maharashtra Sugar Mills is concerned the factual findings therein are entirely distinct and different. In that case it was found by the Tribunal "that the cultivation of the sugarcane as well as the manufacture of the sugar constitute one business" - and that finding was not challenged by the Revenue before this Court. It was contended all the same that the assessees business consisted of two distinct parts. It was this contention which was rejected. The said decision is therefore clearly distinguishable in the light of the facts found in the present case. Mr Ramachandran then relied upon the decisions in CIT v. Prithvi Insurance Co. Ltd. Produce Exchange Corpn. Ltd. v. CIT, Standard Refinery and Distillery Ltd. v. CIT and B.R. Ltd. v. V.P. Gupta, CIT. All the decisions were rendered with reference to Section 24(2) of the Indian Income Tax Act, 1922. The question in all these cases was whether the business continued by the assessee in the relevant assessment years is the very same business wherein loss was originally sustained within the meaning of Section 24(2). The question considered in these decision is not the same as herein concerned. The object of enquiry in both the cases is not identical. We do not think it necessary to deal with the facts of each of the decisions for the aforesaid reason and also because the said question is essentially a question of fact. No single test can be devised as universal and conclusive. The question has to be decided on a consideration of all the relevant facts and circumstances. Some facts may tend one way and some others the other way. An overall view has to be taken and a conclusion arrived at. Even if it is found that one or two circumstances among the several circumstances relied upon are not relevant, the finding of fact recorded by the Tribunal cannot be interfered with if there are other relevant circumstances which sustain the finding, as held by this Court in Sree Meenakshi Mills Ltd. v. CIT(1957) 1 MLJ (SC) 1). In the present case, there are a number of other factors - apart from what are pointed out as irrelevant (assuming for the sake of argument that they are irrelevant) - to support the finding of the Tribunal7. Mr Ramachandran also relied upon the decision in CIT v. Indian Bank Ltd. The appellant therein was a banking company, which invested, in the course of its business, a large sum in securities including securities the interest from which was exempt from tax. While computing the business income of the assessee, profit and losses on the purchase and sale of all such securities were duly taken into account. The contention of the Revenue was that where a part of the profits of a business is not taxable, the expenditure incurred for earning those profits cannot be allowed as deduction. It was accordingly submitted that interest on monies borrowed from various depositors should be proportionately disallowed keeping in view the amounts invested in non-taxable securities. This argument was rejected with reference to and on the basis of Section 10(2)(xv) of the 1922 Act (corresponding to Section 37 of the present Act). We are unable to see how this decision helps the assessee on the question at issue8. Once we answer Questions 1 and 2 against the assessee, it is agreed, the third question does not really present any differently. It too has to be answered against the assessee

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]In the present case, there are a number of other factorsapart from what are pointed out as irrelevant (assuming for the sake of argument that they are irrelevant)to support the finding of the Tribunal7. Mr Ramachandran also relied upon the decision in CIT v. Indian Bank Ltd. The appellant therein was a banking company, which invested, in the course of its business, a large sum in securities including securities the interest from which was exempt from tax. While computing the business income of the assessee, profit and losses on the purchase and sale of all such securities were duly taken into account. The contention of the Revenue was that where a part of the profits of a business is not taxable, the expenditure incurred for earning those profits cannot be allowed as deduction. It was accordingly submitted that interest on monies borrowed from various depositors should be proportionately disallowed keeping in view the amounts invested insecurities. This argument was rejected with reference to and on the basis of Section 10(2)(xv) of the 1922 Act (corresponding to Section 37 of the present Act). We are unable to see how this decision helps the assessee on the question at issue8. Once we answer Questions 1 and 2 against the assessee, it is agreed, the third question does not really present any differently. It too has to be answered against the assessee