Law:

Section:

â- Section 37(1) of the Income-tax Act, 1961, read with section 25FF of the Industrial Disputes Act, 1947 - Business Expenditure - Allowability of - Assessment years 1978-79 to 1981-82 - Assessee was engaged in business of manufacture and sale of liquor against a licence which was valid up to 31-3-1978 - It claimed a deduction of retrenchment compensation payable to workers on ground that since its licence was coming to an end on 31-3-1978 and there was no surety of its renewal, it served a notice under section 25FF of 1947 Act to workers seeking to retrench their services w.e.f 31-3-1978 - Whether mere serving of notice under section 25FF of 1947 Act was not sufficient;termination of employment, as a fact of, employees and actual payment to each of worker under head retrenchment compensation was necessary - Held, yes - Whether since license though expired on paper on 31-3-1978 but again it was continued to operate and enjoyed by assessee up to 31-3-1981 uninterruptedly, it could be said that it was a case where neither business of an assessee came to an end, nor license came to an end and nor any of employee was retrenched - Held, yes - Whether, therefore, assessee was entitled to claim the benefit of any deduction - Held, no â-¡Section 43(1), read with section 32, of the Income-tax Act, 1961 - Plant - Assessment years 1978-79 to 1981-82 - Whether bottles used in liquor business are plant and depreciation on it can be claimed - Held, yes â-¡Section 28(i) of the Income-tax Act, 1961 - Business income - Chargeable as - Assessment years 1978-79 to 1981-82 - Whether where assessee engaged in liquor business, used to collect money as deposit/security from each customer against bottles sold to him and, on fulfilment of conditions stipulated in that behalf, assessee had to refund money to customer, surplus in bottle deposit account could not be treated as income of assessee - Held, yes FACTS The assessee-firm was engaged in the business of manufacture and sale of liquor against a licence valid up to 31-3-1978, which was renewed for a further period up to 31-3-1981. For the assessment years 1978-79 to 1981-82, it claimed deduction being retrenchment compensation…

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