Law:

Section:

Section 37(1) of the income-tax act, 1961-Business expenditure-Assessee owned ten processing units for cashewnuts in different states-Owing to labour trouble resulting in lock-out, out of four units situate in Kerala, two were leased out to a company, P, and remaining two units were surrendered by assessee before expiry of lease period-Assessee also handed over all accounts, registers, etc., of two units to P-Agreement with P provided that inevent of retrenchment of employees, assessee had to pay retrenchment compensation-On settlement with union of disputes which resulted in lock-out, assessee paid retrenchment compensation-For relevant assessment year, assessee claimed deduction for retrenchment compensation paid to employees from its other business income-Whether in view of fact that liability to pay retrenchment compensation arose for first time on account of transfer or surrender of aforesaid four units and not in course of carrying on of business and that assessee had not produced any substantial evidence to prove that all ten units constituted one business, assessee was not entitled to deduction of impugned retrenchment compensation-Held, on facts, yes-Whether burden of proving that all ten units of assessee constituted one business, was on assessee and not on revenue-Held, yes. Section 254, read with section 256(1), of the income-tax act, 1961-appellate tribunal-Orders of-Whether, where tribunal has misdirected itself in law in arriving at its finding or has overlooked or ignored clinching document which amounts to misdirection in law, such a finding is not binding upon high court-Held, on facts, yes-Whether where tribunal has wrongly cast burden of proving a fact on a party, it amounts to misdirection in law and conclusion-Held, yes. Section 256(1), read with section 258, of the Income-tax Act, 1961-reference-Powers of high court-Whether where tribunal misdirected itself in law in arriving at its finding, matter can be remitted to tribunal for de novo consideration of facts without answering question as referred to court-Held, no-Whether in such a case if statement of case before court is complete and contains all material facts already on record, high…

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