Law:

Section:

Section 37(1) of the Income-tax Act, 1961 [Corresponding to section 10(1) of the Indian Income-tax Act, 1922] - Business expenditure - Allowability of - Assessment year 1955-56 - Whether if an assessee carries on several distinct and independent businesses, and one of such businesses is closed before previous year, he cannot claim allowance under section 10 of Act of 1922 of an outgoing attributable to business which is closed against income of his other businesses in that year - Held, yes - Assessees were lesser of a cinema theatre - After expiry of lease landlord filed an action in civil court in ejectment against assessee and obtained a decree for possession of theatre and an order for payment of mesne profits - Assessee claimed parts of mesne profits as allowance for computation of income from business of exhibiting films - ITO disallowed claim of assessee on ground that business of cinema theatre in question was not carried out during relevant previous year - Appeal of assessee before AAC was also failed - Tribunal also disallowed claim of assessee observing that assessees were acquiring various theatres from time to time either on lease or otherwise and run each of them independently with separate identifiable books; opening of a new theatre or closure of another would not affect working of remaining ones - High Court affirmed Tribunal's order - Whether since there was no evidence about unity of control and management, or inter-relation of business, or employment of same staff to run business, or possibility of one theatre being closed without affecting rest of the business, on facts found by Tribunal, it was difficult to hold that assessee had made out their case that venture of cinema theatre in question was a part of a general business of exhibiting films in cinema theatres carried on by assessees - Held, yes - Whether, therefore, assessee's claim was rightly disallowed by authorities below - Held, yes FACTS The assessees were lessees of a cinema theatre, namely. 'P' talkies and carried on the business of exhibiting cinematograph films in that theatre. After the expiry of the lease the landlord filed an action in the civil court in ejectment against…

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