Law: Income Tax Act, 1922

Section: 10,10(2)(xv)

[Indian Income Tax Act. 1922 (XI of 1922)]....Section 10(2)(xv)-Business expenditure-Overdraft facilities-Expenditure incurred for raising or securing overdraft facilities from bank- Whether business expenditure- Held yes; Case applied:- India Cements Ltd. V. Commissioner of Income Tax (1966) 60 I.T.R. 52 (S.C.) Case reversed:- Jeewanlal (1929) Ltd. v. Commissioner of Income Tax (1965) 57 I.T.R. 132. JUDGMENT [The judgment of the court was delivered by SHAH, J.].-The appellant-Company started negotiation with a bank for securing overdraft facilities for the purpose of its business and in that connection had to incur an expenditure of Rs. 35,800. The amount so spent was claimed by the appellant company as a permissible deduction in proceedings for assessment of income tax for the year 1952-53. The departmental authorities rejected the claim for allowance of the amount and the Tribunal confirmed that order. The Tribunal, at the instance of the appellant Company, referred the following question to the High Court of Calcutta: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the sum of Rs. 35.800 incurred by the assessee for the purpose of raising or securing over-draft facilities from the bank was an expenditure of a capital nature not allowable under Section 10(2)(xv)?" This Court in India Cements Ltd, v. Commissioner of Income Tax [(1966) 60 I.T.R. 52 (S.C.) held that the expenditure incurred by the assessee for obtaining a loan…

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