Law:

Section:

Section 37(1) of the Income-tax Act, 1961-Capital or revenue expenditure-Assessee purchased running transport business from transport company with outstanding tax arrears-Department attached assessee's buses for realising dues of transport company-Assessee paid dues and got buses released-Whether said payment allowable as revenue expenditure under section 37(1)-Held, on facts, yes Facts The assessee purchased a running transport business from a transport company which had some arrears of income-tax outstanding against it. The buses in possession of the assessee were attached by the revenue authorities for realising the dues of the transport company. The assessee paid certain amount for release of the buses and claimed the same as admissible business expenses in the assessment years 1965-66 and 1966-67. The Tribunal held that the expenditure incurred by the assessee was wholly and exclusively for the purpose of its business and allowed the payment as deduction under section 37(1). On reference: Held The test for determining whether an expenditure falls under section 37(1) and can be allowed as deduction is of commercial expediency. A payment voluntarily made in order to facilitate the carrying on of the business on the ground of commercial expediency may amount to expenditure wholly and exclusively for the purpose of the business. In the instant case, the possession of buses by the assessee was absolutely necessary for carrying on its business. Commercial expediency required payment of the dues for release of the buses so that the assessee could carry on its business. It was immaterial that the assessee was not bound to pay the income-tax dues of the transport company. Accordingly, the Tribunal was right in holding that the impugned payment made by the assessee was an allowable deduction. Case review Addl CIT v. Kuber Singh Bhagwandas [1979] 118 ITR 379 (MP) (FB) followed. Dashmesh Transport Co. (P.) Ltd. v. CIT[1980] 126 ITR 681 (Punj. & Har.) distinguished. Cases referred to Addl. CIT v. Kuber Singh Bhagwandas [1979] 118 ITR 379 (MP) [FB] and Dashmesh Transport Co. (P.) Ltd. v. CIT[1980] 125 ITR 681 (Punj. & Har.). JUDGMENT K.K. Dubey J.-This is a…

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