9911796707
|
Home
Issues involved:
The issue involves the allowability of expenditure claimed by the assessee company under different heads, considering the necessity of the company to retain its status under the Companies Act, 1956, and the expenditure incurred for earning income assessed under the head 'Other sources'. Summary: The High Court of Calcutta addressed a reference under section 256(1) of the Income-tax Act, 1961, for the assessment year 1976-77. The Income-tax Officer initially found that the assessee-company did not conduct any business during the relevant year, only earning income from interest in investments. The Officer allowed expenses of Rs. 1,000 as admissible under section 57(iii) of the Income-tax Act, 1961. Upon appeal, the Commissioner of Income-tax (Appeals) disallowed the deduction of expenses totaling Rs. 74,044 as no business activity was carried out during the year. The Tribunal, however, noted that the company's coal mines had been nationalized and that it was retaining its status under the Companies Act, 1956. The Tribunal directed the Income-tax Officer to examine the expenditure claimed by the assessee in light of the necessity to retain the company's status and the expenditure for earning income under 'Other sources'. The Court emphasized that as long as a company is not formally struck off the Register of Companies, it has statutory obligations requiring certain expenditures to maintain its status. Considering the income earned by the company from other sources, it was deemed necessary to incur certain expenses. The Court upheld the Tribunal's direction to the Income-tax Officer to assess the allowability of the expenditure in question. In conclusion, the Court answered the reference question affirmatively and in favor of the assessee, with no order as to costs. Both Judges, Shyamal Kumar Sen and Ajit Kumar Sengupta, concurred with the decision.
|
