1980 (3) TMI 74 - HC - Income Tax

Summary

Issues involved: Disallowance of business expenditure claimed by the assessee for assessment year 1969-70, applicability of res judicata, nature of expenditure as capital or business expense.

Dispute Overview:
The assessee, a private limited company in the transport business, claimed deduction of Rs. 2,77,364 as business expenditure related to income-tax liability of another company. The claim was disallowed by the Income Tax Officer (ITO) and confirmed by the Appellate Authority (AAC).

Res Judicata and Fresh Decision (Question 1):
The Tribunal found that a previous judgment did not operate as res judicata as it did not determine the nature of the expenditure. It is established that a finding in one assessment year does not bind in subsequent years. Therefore, the Tribunal's decision for a fresh decision on the allowability of the expenditure was upheld in favor of the revenue.

Nature of Expenditure (Question 2):
The Tribunal concluded that the expenditure representing the liabilities of the other company was in the nature of capital expenditure. The assessee's argument that it should not be considered capital expenditure was dismissed as the liabilities formed part of the consideration for acquiring assets. Question 2 was answered in favor of the revenue.

Redundancy of Question 3:
Since Question 2 was decided against the assessee, Question 3 became redundant and was not addressed. No costs were awarded in this matter.

Judges' Concurrence:
Both Judges, B. S. Dhillon and S. P. Goyal, concurred with the decisions and reasoning presented in the judgment.