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 years 1959-60 to 1962-63 - Assessee was managing agent of company, namely, DCM by virtue of managing agency agreement and said appointment was to continue till Jan. 1967 - However, enactment of companies Act, 1956 made it necessary for assessee to obtain a reappointment of itself on or before 15-8-1960 - DCM called two meetings of its shareholders on different dates, one to consider proposal for said reappointment for five years and another to pass a resolution for sanctioning a guarantee commission to assessee - Assessee took steps to procure proxies from shareholders in order to ensure smooth passage of above proposals - Tribunal held that expenditure incurred on both counts for procuring proxies was capital in nature and hence disallowable - Whether since fresh term of appointment did not extend beyond term of original appointment and all that company achieved by passing of resolution was to retain managing agency for five more years beyond 15-8-1960, assessee did not acquire any new asset or advantage and, therefore, said expenditure was allowable as revenue expenditure - Held, yes - Whether, since, in regard to second expenditure, all that assessee attempted to do was to make remuneration payable to it under managing agency agreement more comprehensive and to increase profitability of its existing source of income, expenditure therefor was revenue in nature and allowable as deduction in computing its profits - Held, yes FACTS The assessee was the managing agent of the DCM by virtue of a managing agency agreement, and the appointment was valid upto Jan. 1967. As a result of the encactment of the companies Act, 1956, it became necessary for the assessee to obtain a re-appointment on or before 15-8-1960, if it was to continue in office after that date. The managed company had called two meetings of the shareholders, on two different dates, one to consider the proposal for the said reappointment, and, the other to consider a resolution for sanctioning guarantee commission to the assessee. In…

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