Law:

Section:

I. Section 28(i) of the Income-tax Act, 1961 – Business income – Chargeable as – Assessment year 1963-64 – Assessee, a manufacturer of textile goods, received certain amount under export incentive scheme framed by Government – Whether amount received by assessee was receipt in course of carrying on of business and as such was taxable income - Held, yes FACTS I The assessee was engaged in the manufacture of cotton textiles, rayon, yarn and also transparent paper. In order to acquire foreign exchange, the Government of India started an export promotion scheme. An exporter of cotton cloth or yarn was eligible for grant of import licences to the extent specified. The assessee received certain amount under this scheme and claimed same as casual receipt. The ITO rejected the claim on grounds that the receipt had been earned by the assessee in the course of its business as a textile manufacturer and was being accounted for by the company as a receipt year after year and also that company was entitled to receive this sum as a matter of law and this receipt had occurred in the course of the assessee's trade and its capacity as a trader. The AAC confirmed the order of ITO. The Tribunal held that the amount received by the assessee was a receipt in the course of carrying on of the business and as such, was taxable income. On reference : HELD I The amount was received in the course of carrying on of the business. The amount was received in cash. The fact that in the course of carrying on of the business an amount was received which could be turned into capital, did not, in any way, militate against the said amount being considered to be a revenue receipt. This was not in the nature of a subsidiary or a grant from the Government. Therefore, the Tribunal was justified in treating the amount received by the assessee under the export incentive scheme as a receipt in the course of carrying on of the business and as such said receipt was taxable income. II. Section 37(1) of the Income-tax Act, 1961 – Business expenditure - Allowability of – Assessee company paid salary to wife of one of its employee and claimed deduction thereof on ground that lady was supervising canteens,…

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