1980 (8) TMI 68 - HC - Income Tax

Summary

Issues:
Interpretation of payment to Textile Commissioner as penalty or business expenditure, Allowability of business expenditure under specific provisions, Claim of balancing allowance under section 32(1)(iii) for written off asset, Nature of cost of electric motor.

Analysis:
The judgment involves two references arising from the same Tribunal order, one by the revenue and the other by the assessee, regarding various tax-related questions. The first issue pertains to whether the payment made to the Textile Commissioner constitutes a penalty or a business expense. The court relied on a previous decision and ruled in favor of the assessee, determining it as a business expenditure. The second issue concerns the allowability of payments made to the Textile Commissioner under specific provisions of the Cotton Textile (Control) Order, 1968. The court decided in favor of the assessee based on relevant legal provisions and precedents.

Moving on to the third issue, it involves the claim of a balancing allowance under section 32(1)(iii) for a bore-well written off by the assessee. The court analyzed the facts surrounding the bore-well, emphasizing the commercial considerations and the requirement of actual writing off in the books of the assessee. The court disagreed with the Tribunal's decision and held that the conditions of section 32(1)(iii) were satisfied, entitling the assessee to the balancing allowance. Thus, question number three was answered in favor of the assessee.

Lastly, the fourth issue regarding the nature of the cost of an electric motor was not pressed during the hearing, leading to no specific ruling on this matter. The judgment also addressed the costs, directing the Commissioner to pay the costs of one reference to the assessee and making no order as to costs for the other reference. Overall, the judgment provides detailed analysis and legal interpretation on various tax-related issues, ensuring clarity on the application of relevant provisions and precedents in determining the outcomes of the references.