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Issues:
1. Whether the activities of different departments of the assessee constitute a single business. 2. Whether the payment of gratuity, retrenchment compensation, and notice pay is an admissible deduction in computing total income for the assessment year. Analysis: 1. The assessee, engaged in transport business, decided to wind up the passenger transport wing due to operational costs. The Appellate Assistant Commissioner found the passenger and goods transport to be part of a single business, with interlocking funds and common management. The Tribunal noted a period of inactivity but no cessation of activities, ruling the payments admissible as they were made in the course of business. 2. The Revenue argued for treating the closure of the passenger transport as business closure, citing a Supreme Court case. However, the High Court held that the transport business continued despite the closure of the passenger wing, as the main business included both goods and passenger transport. Referring to a Supreme Court decision, the High Court deemed the payments of gratuity, retrenchment compensation, and notice pay as business expenditure, especially as the retrenchment definition was broadened by another Supreme Court ruling. The Court answered both questions in the affirmative against the Revenue, directing the Revenue to pay costs and counsel's fee. This judgment clarifies the treatment of business closure and admissibility of employee payments in the context of winding up specific business wings within a larger business entity.
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