1966 (8) TMI 2

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..... d out for the purpose of its business - expenditure incurred by the assessee is an allowable item of deduction under s. 10(2)(xv)
Judge(s) : S. C. MANCHANDA., M. H. BEG. JUDGMENT The judgment of the court was delivered by MANCHANDA J.-This is a statement of the case under section 66(l) of the Income-tax Act, 1922 (hereinafter referred to as the Act). The question referred is: "Whether the .....

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..... e on the renewal of an agreement but for entering into a new agreement, and, as such, it was capital expenditure in nature. The Appellate Assistant Commissioner agreed with this view and added that the expenditure did not bring into existence a new asset of an enduring nature. On second appeal to the Tribunal, the agreement with the bank was not forthcoming and so it proceeded to decide the case o .....

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..... ital goods or for acquisition of the stock-in-trade or to meet the day-to-day running of a business. The very word " loan " implies a liability, and it is, therefore, difficult if not impossible to conceive of a loan as something which brings into existence an asset of an enduring nature. In the statement of the case it is conceded that the expenditure was for the purpose of obtaining an overdraft .....

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..... dia Cements Ltd. v. Commissioner of Income-tax is that " where there is no express prohibition, an outgoing, by means of which an assessee procures the use of a thing by which it makes a profit, is deductible from the receipts of the business to ascertain taxable income ". On the facts of that case, their Lordships held, " that the money secured by the loan was a thing for the use of which this ex .....

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..... ee to procure the use of money from the bank in the shape of an overdraft for the purpose of its business and as such it was an expenditure wholly laid out for the purpose of its business. For the reasons given above, we would answer the question referred in the affirmative, and in favour of the assessee. The Commissioner of Income-tax will pay the costs of this reference, which we assess at Rs. .....

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