Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of Where assessee's liability to pay certain amount of compensation to a foreign company was contingent upon quantity shipped as per orders placed by foreign company, liability being contingent was not allowable as deduction [Assessment Years 1984-85] The liability, which is contemplated to have been incurred should not be a contingent liability, that is to say it should not be contingent upon the happening or not happening of future events. The assessee under the earlier contract was alleged to be liable to make payment of a certain amount on compensation. However, that liability stood modified by a subsequent contract between the parties which provided that compensation under the earlier contract would be paid and payable by reimbursement by the assessee to the foreign company only if orders were placed by that foreign company with the assessee. Further, more importantly clause 2 of the second contract in its last sentence contemplated as follows "for each ounce shipped there will be a reimbursement by the assessee to foreign company at 50 cents per ounce." The question was whether the liability in question was to be allowed as deduction. Held that the liability to pay the compensation was contingent upon shipping per ounce. That is to say, if for any reason in future the shipping was stopped, abandoned or could not take place, the liability to pay compensation to the extent of the goods not shipped would not arise. In the circumstances, the liability, which the assessee was claiming was not a fixed liability but was a contingent liability and, therefore, the deductions sought by the assessee were not permissible under section 37. Section 80HHA/ 80I of the Income-tax Act, 1961 - Deduction - Profit and gains from newly established small scale industrial undertakings Cash compensatory support and profits on sale of import entitlements do not form part of eligible profits for purpose of computation of deductions under sections 80HHA and 80-I; duty drawback also cannot be termed as profits derived from industrial undertaking and is accordingly not required to be taken into account for…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492