1993 (6) TMI 31 - HC - Income Tax

Summary

Issues Involved: The Tribunal's failure to make separate references for three different years - 1973-74, 1974-75, and 1975-76. Allowability of deduction for business expenditure claimed by the assessee for the respective assessment years.

Judgment Details:

Issue 1: Failure to Make Separate References
The High Court directed the office to treat Income-tax Reference No. 548 of 1980 as a reference for the assessment year 1973-74, and Income-tax Reference No. 548A of 1980 and Income-tax Reference No. 548B of 1980 as references for the assessment years 1974-75 and 1975-76, respectively. This was necessary as identical but separate questions arose for each of these years.

Issue 2: Allowability of Deduction for Business Expenditure
- The assessee claimed deductions for expenditure of Rs. 18,536, Rs. 10,089, and Rs. 19,722 for the assessment years 1973-74, 1974-75, and 1975-76, respectively, arguing it was business expenditure.
- The Income-tax Officer initially rejected the claim, citing disproportionality to income.
- The Appellate Assistant Commissioner, however, accepted the claim and allowed the appeals filed by the assessee.
- The Department appealed to the Tribunal, which upheld the decision of the Appellate Assistant Commissioner.
- The High Court noted that the expenditure was genuinely incurred and related to the business activity of the assessee. The Tribunal correctly emphasized that the Department's approach was flawed.
- The deductibility of business expenditure is determined by the relevant provisions of law, not by the income earned after incurring the expenditure. Thus, the Tribunal was correct in allowing the deduction for the expenditure claimed by the assessee for the respective assessment years.
- Consequently, the question was answered in favor of the assessee and against the Revenue, with no order as to costs.