Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessee had leased out its theatre building to another party - As per lease agreement, liability to pay electricity charges was on lessee and assessee was getting rent net of electricity charges - Assessee's case was that during relevant year, there was change in terms of agreement through correspondence between assessee and lessee whereunder assessee had agreed to reimburse electricity charges paid by lessee - Assessee originally returned entire rental income and later on, filed a revised return claiming deduction of an amount being reimbursement of electricity charges - Tribunal rejected its claim holding that there was no acceptable evidence - Whether, if claim was bona fide, assessee could have produced documents in form of assessment order completed in name of lessee showing inclusion of amount being reimbursement received from assessee - Held, yes - Whether in absence of any clear evidence towards that, Tribunal was justified in assuming that original agreement providing for payment of electricity charges by lessee had continued to be operative - Held, yes - Whether, therefore, Tribunal had rightly rejected assessee's claim - Held, yes K.R. Sudhakaran Pillai and Sajith Kumar V. for the Appellant. P.K.R. Menon and George K. George for the Respondent. JUDGMENT C.N. Ramachandran Nair, J. - Heard Sri K.R. Sudhakaran Pillai, counsel appearing for the assessee-appellant and Standing Counsel appearing for the Income-tax Department. The only question raised is whether the Tribunal was justified in confirming disallowance of Rs. 5,40,000 towards electricity charges paid by the assessee for the theatre building leased out to another party. It is clear from the Tribunal's order that under the original lease agreement made on 12-12-1984, liability to pay electricity charges is on the lessee and the assessee was getting rent net of electricity charges. However, counsel for the…

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