Law:

Section:

Section 37(1) of the Income-tax Act, 1961 [Corresponding to section 10(2)(xv) of the Indian Income-tax Act, 1922] - Business expenditure - Allowability of - Assessment year 1946-47 - Assessee was carrying on business as sale selling agents of sugar mill - For running said agency, assessee maintained staff and incurred certain expenditure - Subsequently, Sugar Control Order, 1942, was passed in which it was directed that producer of sugar would dispose of sugar only to a recognized dealer or person specifically authorised by Sugar Control of India - Inspite of said notifications assessee continued to maintain selling agency office and incurred expenditure thereon - Whether by reason of Sugar Control Order and notification issued thereunder, assessee could not do any selling agency business in sugar - Held, yes - Whether, therefore, expenditure incurred for maintenance of staff of selling agency during period when it carried on no business was not admissible deduction under section 10(2)(xv) of 1922 Act - Held, yes FACTS The assessee-firm was acting as managing agents of a sugar mill. The assessee was also carrying on the business as sole selling agents. To carry on the latter business the assessee had an office at Kanpur. The Sugar Control Order, 1942 had directed that the 30-4-1942 as the date after which a producer shall dispose of his sugar only to a recognized dealer or a person specially authorized by the Sugar Controller of India, etc. In spite of these notifications the assessee continued to maintain the selling agency office at Kanpur and incurred expenditure thereon. In the meanwhile the directors of the sugar mills passed a resolution that the selling agents would not be given any more brokerage for sale of sugar after 1-10-1944 and that though the selling agents could no longer work as selling agents by reason of the Government Notification, the company continued to pay them brokerage up to 30-9-1944, on sale of sugar made by the company direct to the dealers nominated by the Government. When the said resolution was passed that the assessee disbanded the staff at Kanpur and closed the selling agency office. In the assessment year 1946-47, the assessee…

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