Law:

Section:

Section 28(i), read with section 36(1)(vii) of the Income-tax Act, 1961 [Corresponding to section 10(1), read with section 10(2)(xi), of Indian Income-tax Act, 1922] - Business loss - Allowable as - Assessment year 1957-58 - Assessee firm entered into agreement with sole selling agent of certain mill to purchase and sell its entire output for which it was to be allowed certain rebate in price and to make deposit of certain sum in first instance to be followed by further deposits as and when required by mills as security against sales effected though it - Assessee claimed deduction of certain irrecoverable amount of security deposit which it had written off in accounting year relevant to assessment year in question under section 10(2)(xi) of 1922 Act - Tribunal had a part of debt was inadmissible being capital loss - Whether assessee did not pay security money to acquire right to carry on business of selling agency but it was paid by him for purpose of carrying on business in terms of agreement and earning profits thereby - Held, yes - Whether payment of security money could not, therefore, be regarded as a capital expenditure but was, in fact, not an expenditure at all, much less a capital expenditure - Held, yes - Whether, therefore, loss of security was a loss incidental to business of assessee and it was allowable under section 10(1) of 1922 Act - Held, yes FACTS The assessee was a registered firm carrying on business in cloth, share dealings, etc. On 1-3-1951, the assessee had entered into an agreement with a certain company who were the sole selling agents of yarn and piece goods manufactured by as 'the manufacturers'. The agreement was, substantially, to the effect that the company would sell and the assessee would purchase the entire output of the manufacturers, namely, piece-goods, yarn, hosiery, etc, and, in return, the assessee would be entitled to a rebate in price at the rate of Re. 1-8-0 per hundred rupees. The agreement was to remain in force for a period of five years certain commencing from the 10-5-1950, and it was to continue thereafter until determined by six months' notice in writing by either party. The transactions were carried on between…

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