Law: Income Tax Act, 1922

Section: 10(1)

Income-tax Act, 1922 -- Section 10(1) -- Business -- Expenditure incurred towards maintenance of establishment etc. during the period of suspension of business activities -- Whether Capital or revenue expenditure - Corresponding Sections: Income-tax Ordinance, 1979 -- Section 22(a) -- JUDGMENT (The judgment was delivered by A.S.M. Salek, Member).-In this appeal of the assessee for the charge year 1954-55 the only ground was taken was that the Income-tax Officer was wrong in not allowing expenses amounting to Rs. 16,582 incurred for the purpose of business for the year. The facts are that the assessee was a private limited company which had among others dealing in business of coal, under a licence from Government all along. During the year under appeal they got no licence for importing coal but they maintained the establishment etc., so that the business might be carried on as they did in subsequent years. The Appellate Assistant Commissioner upheld the Income-tax Officer's disallowance as there was no business done by the appellant during the year. On scrutiny of the assessment records the position of the assessee's business is summarised as follows:- Assessment Account year Business profit I.T.O's order year or loss. 1 2 3 4 1950-51 1949 Nil Filed for the year. 1951-52 Ending 30-6-50 Commission earned 13507- Business started on 8-7-51. No previous year Ending 30-12-50 loss 73467- business Nil. So--file. 1952-53 Ending 31-12-51 Business Nil Expenses 14,440/- Expenses allowed. 1953-54 Ending 31-12-52 G.P. 34267- Expenses 14,1837- Expenses allowed Nil assessment. 1954-55 Ending 31-12-53 Business Nil Expenses 16,582/- Under appeal Expenses dis-allowed . 1955-56 Ending 31-12-54 G.P. 21317- Expenses 14,740/- Expenses allowed. 1956-57 Ending 31-12-55 Business Ata, Suji, etc., 30,633 Coal-606/- Expenses 74,7717- Expenses allowed. 1957-58 Ending 31-12-56 Business G.P.66977- Expenses 26,124/- Expenses allowed. 1958-59 Ending 31-12-57 G.P.30677- Expenses 27,622/- Expenses allowed From the above figures it appears that the assessee had dealings in coal from 1951-52 with a gap for the years 1952-53 and 1954-55 due to their not getting import licence. The business was…

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