Law:

Section:

Section 37(1) of the Income-tax Act, 1961 [Corresponding to section 10 of Indian Income-tax Act, 1922] - Business expenditure - Allowability of - Assessment years 1948-49 & 1949-50 - Government acquired electric supply undertaking of assessee-company and assessee-company received a part of compensation and balance was to be paid later on - Company invested entire amount in Government securities, etc. and received income there from which became its sole income - ITO rejected claim for deductions under section 10(2)(xv) of various expenses incurred by assessee during period subsequent to taking over on ground that company did not carry on any business - On appeals, AAC who held that assessee company ceased carry on business as to come within section 10 of 1922 Act - However, Tribunal held that company was continuing its business - On, references High Court affirmed Tribunal's order - Whether business as contemplated by section 10 is an activity capable of producing a profit which can be taxed and payment of outstanding liabilities is not an activity which can ever produce such a result - Held, yes - Whether where business had in fact ceased to be run, it must not be deemed as continuing merely because outstanding liabilities of that business had not been liquidated - Held, yes FACTS Government acquired the electric supply undertaking belonging to the assessee-company. The company delivered all assets to the Government. The company received a part of the moneys payable to it, leaving a large amount due to be paid later after the listing valuation of its assets. The Company invested these moneys in Government securities and shares, and, received income from these investments. For the assessment years 1948-49 and 1949-50, the company claimed deduction of various amounts under section 10(2)(xv) on the basis that it had been carrying on business and the expenses had been incurred solely for the purpose of that business. This contention was rejected by the ITO. On appeal by the company to the AAC, certain deductions were allowed but that authority did not accept the contention that the company was carrying on business so as to come within section 10. The company…

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