9911796707
|
Home
Issues Involved:
1. Disallowance of Rs. 14,260 for a car given to an employee u/s 10(2)(xv) of the Indian Income-tax Act, 1922. 2. Classification of Rs. 23,600 and Rs. 17,771 as capital expenditure for the assessment years 1961-62 and 1962-63, respectively. Summary: Issue 1: Disallowance of Rs. 14,260 for a Car Given to an Employee The first issue pertains to whether the Tribunal was correct in upholding the disallowance of Rs. 14,260, being the value of a car given to Shri Durgadas, on the ground that it was not an expenditure allowable u/s 10(2)(xv) of the Indian Income-tax Act, 1922. The assessee argued that the car was presented to Shri Durgadas in appreciation of his long and distinguished service, and thus, the expenditure was necessitated by business expediency. The Tribunal, however, upheld the disallowance, citing the Supreme Court decision in Gordon Woodroffe Leather Manufacturing Co. v. CIT [1962] 44 ITR 551. The High Court noted that the assessee failed to provide sufficient material to prove that the payment was made on grounds of commercial expediency rather than as a personal gift. Consequently, the court answered the first question in the affirmative and in favor of the revenue. Issue 2: Classification of Rs. 23,600 and Rs. 17,771 as Capital Expenditure The second issue concerns whether the sums of Rs. 23,600 and Rs. 17,771, spent on laying new electric cables to switch from direct current to alternating current, constituted capital expenditure. The Tribunal had classified these expenditures as capital, reasoning that they brought about an improvement in the efficiency and output of the printing press, thus creating an asset of enduring advantage. The High Court, however, disagreed, stating that the expenditure did not result in the acquisition of any asset by the assessee since the cables remained the property of the New Delhi Municipal Committee. The court held that the expenditure was incurred to facilitate the assessee's trading operations and improve business efficiency, thus qualifying as revenue expenditure. The court answered the second question in the negative, stating that the sums of Rs. 23,600 and Rs. 17,771 were allowable in the computation of the business expenditure of the assessee. Conclusion: The High Court ruled in favor of the revenue on the first issue, affirming the disallowance of Rs. 14,260. On the second issue, the court ruled in favor of the assessee, determining that the expenditures of Rs. 23,600 and Rs. 17,771 were revenue in nature and thus allowable. No order as to costs was made.
|
