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TMI Blog1983 (4) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... t of retrenchment compensation was not of a revenue nature and did not constitute an allowable expenditure in computing the income of the assessee for the assessment year 1972-73 ?" The Tribunal has now forwarded the statement of the case and referred the aforesaid question of law to this court for its opinion. The material facts, giving rise to this reference briefly, are as follows The assessee is a registered firm, which was carrying on the business of exhibition of films during the assessment year 1972-73, for which the account period ended on 31st December, 1971. The business of exhibition of films was carried on by the assessee at Indore in two theatres, namely, Shri Krishna Cinema and Raj Talkies, which were taken on lease by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee filed an application in this court under s. 256(2) of the Act. That application was allowed and the Tribunal was directed to state the case and refer the aforesaid question of law to this court for its opinion. Before we proceed to answer the question, it is necessary to refer to the relevant provisions of the Act. Section 37(1) of the Act reads as under : " 37. General.-(1) Any expenditure (not being expenditure of the nature described in sections 30 to 36 and section 80VV and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head ' Profits a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee. It was the same business that was carried on by the assessee at two places and hence a discontinuance of business at one place by the assessee would not amount to a closure of that business. Now, if there is no closure of the business of exhibition of films by the assessee during the relevant assessment year, the liability of the assessee to pay retrenchment compensation on account of discontinuance of its business at one theatre, cannot be held to be a liability arising on account of closure of its business. The decision in CIT v. Gemini Cashew Sales -Corporation [1967] 65 ITR 643 (SC), relied upon by the Tribunal and that in Venkatesa Colour Works v. CIT [1977] 108 ITR 309 (Mad), relied upon by the learned counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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