Judgment

HEGDE, J.:- This is an appeal by special leave. It arises from the decision of the Bombay High Court in Income-tax Reference No. 83 of 1962 on its file. That reference was made by the Income-tax Appellat v. Tribunal, Bench B , Bombay. The question of law which was referred for the opinion of the High Court under Section 66 (1) of the Indian Income-tax Act, 1922 (to be hereinafter referred to as the Act) is :-

"Whether on the facts and in the circumstances of this case the Department could disallow a sum of Rupees 1,26,359/- a portion of the managing agency commission paid by the assessee company for the assessment Year 1957-58 in computing the income from business of the assessee company."

2. The assessee is M/s. Maharashtra Sugar Mills Ltd. The concerned assessment year is 1957-58 the corresponding account year ending on 30-9-1956. The assessee is a Limited Company. It carries on business of manufacture of sugar from sugar cane. It owns extensive lands in which sugar cane is grown. The sugar cane grown in these lands is used by the assessee for manufacture of sugar in its factory. The finding of the Tribunal is that the cultivation of sugar cane and the manufacture of sugar