The assessee was a limited company. It owned extensive lands iu which sugar cane was grown and the cane was used by the assessee for the manufacture of sugar in its factory. The cultivation of sugar cane and the manufacture of sugar by the assessee constituted one single and indivisible business. In the assessment year 1957-58, the assessee claimed deduction of remuneration paid to its managing agents under s.10(2)(xv) of the Indian Income-tax Act, 1922, as an item of expenditure laid out or expended wholly or exclusively for the purpose of its business. The Income-tax Officer and the Appellate Assistant Commissioner disallowed a part of the remuneration on the grounds that part of the assessee's business namely cultivation of sugar cane, being an agricultural operation, the income therefrom was not exigible to tax, and therefore, any expenditure incurred in respect of that activity was not deductible. The Tribunal and the High Court on reference, however, upheld the plea of the assessee that the entire sum was deductible.
