9911796707
TMI Blog2000 (11) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... , on the facts and in the circumstances of the case, the assessee is entitled to claim deduction of Rs. 4,18,107, under section 37 of the Income-tax Act, 1961 ?" The assessee, an individual. carried on the business of processing cashewnuts in ten units. Four of these units were situated in Kerala. Of these four units, two were owned by the assessee and two were taken on lease. In October, 1969, the assessee faced labour problems in Kerala, consequent upon which he ordered a lock-out of the four units there. On March 9, 1970, the assessee leased out the two units which he owned in Kerala to a private limited company whose only two shareholders were the assessee and his wife. The agreement in this behalf provided that the workmen employed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a point of this because none of the six questions proceeded upon the basis that the Revenue considered the decision of the Tribunal on the facts to be perverse ; in other words, that it could not reasonably have been arrived at on the materials placed before the Tribunal. Alternatively, assuming that one or, more of the questions did proceed, upon that basis, the Revenue accepted the fact that they were not referred and did not carry the matter to the High Court. There was, therefore no challenge by the Revenue to the facts found by the Tribunal before the High Court. As we read the judgment of the Tribunal, it extensively analysed the documents placed before it and came to the conclusion that the ten units run by the assessee constituted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness, he had to reduce the number of units from ten to six. Any incidental expense in reducing those units was an expenditure incurred in the course of conducting the business and allowable under section 37. The High Court, surprisingly, threw out all the findings of fact that were reached by the Tribunal. It did so because, in the High Court's view, the Tribunal had misdirected itself in law in arriving at these findings. This was because, according to the High Court, the Tribunal had overlooked or ignored a clinching document and because it had wrongly cast the burden of proving the facts on a party. It is difficult to appreciate what that document was that the Tribunal had supposedly overlooked or how the High Court was entitled to loo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of which the expenditure was incurred had been shut down by the assessee. This argument would be acceptable if the Tribunal had found that these four units constituted a separate business. Having regard to the finding that these and all the other units outside Kerala formed one business, the expenditure must be held to have been incurred in regard to such business. Upon the facts found by the Tribunal, there is no getting away from the fact that the expenditure of Rs. 4,18,107 that was incurred by the assessee was a business expenditure and that the assessee was entitled to its deduction under section 37. In the result, the civil appeals are allowed. The impugned judgment and order is set aside. The question is answered in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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