2012 (11) TMI 1250 - HC - Income Tax

Summary

Issues involved:
1. Interpretation of u/s.37(1) of the Income Tax Act regarding allowability of cane supply expenses and cane development expenses.
2. Comparison of requirements under Section 37(1) with Sections 28 to 36 of the Income Tax Act.

Issue 1:
The High Court considered whether the order of the ITAT correctly held that cane supply expenses and cane development expenses are allowable u/s.37(1) of the Income Tax Act, even though they were not proven to be wholly and exclusively for the purpose of business, which is a prerequisite for the allowability of expenditure u/s.37(1) of the Act. The Court analyzed the strict requirement of u/s.37(1) compared to other sections of the Income Tax Act.

Issue 2:
The Tribunal, relying on the decision of the Apex Court in Sasson J. David & Co. P. Ltd. v. CIT (1979) 188 ITR 261, found that expenses incurred wholly and exclusively for the purposes of earning extra income or profession, even if voluntarily incurred without a legal obligation, remain deductible. The Tribunal's decision was based on factual findings, and the Court concluded that no question of law arose, leading to the dismissal of the appeal with no order as to costs.