Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1989-90 - Assessee was mainly manufacturer and vendor of Indian Made Foreign Liquor (IMFL) - It also carried on business of fast food - During relevant assessment year, assessee claimed deduction of certain expenses incurred for landscaping and transportation of its business under head R&D expenses - Assessing Officer disallowed assessee's claim - Whether landscaping expenses incurred for development of land for making it fit for business was in nature of capital expenses and was not allowable as revenue expenses - Held, yes - Whether if transportation expenses have been incurred in connection with business of assessee, it amounts to revenue expenditure unless it can be shown that transportation charges are incurred for procuring an asset of enduring nature - Held, yes - Whether since there was no material to show that transportation expenses were incurred for procuring an asset of enduring nature and also since it was not case of revenue that those expenses were not incurred for business purpose, disallowance of said expenses could not be made merely by stating that they did not relate to research and development of business of assessee - Held, yes Section 43B of the Income-tax Act, 1961 - Business disallowance - Certain deductions to be allowed only on actual payment - Assessment year 1989-90 - Whether a bank guarantee is only a guarantee for payment on some happening and that cannot be actual payment as required under section 43B for allowance as deduction in computation of profits - Held, yes - Whether for assessment year 1988-89 liability incurred by assessee, a manufacturer and vendor of IMFL, towards payments of bottling fee under Rajasthan Excise Act, 1950 read with rule 69 of Rajasthan Excise Rules, 1952 did not attract provisions of section 43B - Held, yes Interpretation of Statutes - Ejusdem generis FACTS The respondent-assessee was manufacturer and vendor of IMFL which is an excisable article within the meaning of the Rajasthan Excise Act and it had been issued licence to manufacture and vend IMFL. The assessee was also given a licence for…

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