1980 (3) TMI 74

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..... ort business with its head office at Ludhiana. The dispute relates to the assessment year 1969-70, wherein the assessee claimed deduction of Rs. 2,77,364 as business expenditure. This amount was paid by the assessee on account of the income-tax liability of Khalsa Nirbhai Transport Company (Private) Ltd., part of whose business had been purchased by it in July, 1964. The ITO disallowed this claim .....

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..... ing income-earning apparatus and was thus a capital expense. Still dissatisfied, the assessee moved an application under s. 256(1) of the I.T. Act, 1961 (hereinafter called "the Act"), which has resulted in the reference of the following three questions for the opinion of this court : " 1. Whether, on the facts of the case, the Tribunal was right in law in holding that a fresh decision as to the .....

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..... or the expenditure of the balance of Rs. 38,676 (representing the other liabilities of the transferor-company) had been laid out for the assessee's business wholly and exclusively as contemplated in section 37(1) of the Income-tax Act ? " A perusal of the judgment, annex. 'F', would show that in the earlier case, the Tribunal did not express any opinion on the question as to whether the expenditu .....

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..... s not operate as res judicata on a similar question in the subsequent assessment year. Question No. 1, therefore, is answered in the affirmative, in favour of the revenue and against the assessee. On the second question, Mr. G. C. Sharma, the learned counsel for the assessee, argued that the expenditure incurred by the assessee would not be a capital expenditure unless the assessee-company had kn .....

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..... senting the liability of Khalsa Nirbhai Transport Company (P.) Ltd. and discharged by the assessee, was in the nature of capital expenditure. Question No. 2, accordingly is also answered in the affirmative, in favour of the revenue and against the assessee. As suggestion No. 2 has been answered against the assessee, question No. 3 has become redundant and need not be answered. No costs. B. S. DH .....

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