Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowable as - Tribunal found that land developed by assessee was stock-in-trade of assessee - Whether expenses incurred for development of land would be held as revenue in nature and, therefore, allowable as business expenditure - Held, yes FACTS The Assessing Officer disallowed the expenditure incurred by the assessee for development of land on the ground that the expenses were not incidental to the activities carried on by the assessee. On appeal, the Deputy Commissioner (Appeals) also treated the amount as a capital expenditure. However, on further appeal, the Tribunal held that expenditure incurred in developing the land, laying down pipe lines, dividing the land into small plots was required to be incurred for the purpose of carrying on the business of selling the stock-in-trade, i.e.,land. The Tribunal, therefore, allowed the expenditure as business expenditure. On reference : HELD The facts found by the Tribunal were that the land had been developed and the expenses were incurred in developing the land. That land had been treated and found by the Tribunal as stock-in-trade. In view of the finding of the Tribunal, no interference was called for in the order of the Tribunal. J.K. Singhi for the Applicant. JUDGMENT 1. On an application under section 256(1) of the Income-tax Act, 1961 ('the Act'), the Tribunal has referred the following question for our opinion : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal erred in holding that the expenditure of Rs. 30,183 incurred by the assessee for development…

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