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TMI Blog1976 (9) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and in the circumstances of the case, the Tribunal was right in law in holding that the sum of Rs. 1,506 is not allowable as a revenue expenditure ?" T.C. No. 10 of 1972: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sum of Rs. 708 is not allowable as a revenue expenditure ? " T.C. No. 226 of 1972: This reference has been made by the Cochin Bench under section 256(1) of the Income-tax Act, 1961, raising the following question for the opinion of this court : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the sum of Rs. 1,372 was not allowable as an expenditure in the computation of the assessee's p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the business, viz., the Hindu undivided family and that in the circumstances the expenditure incurred on the compromise of the suit and other expenses incidental to the suit could not be described as an expenditure incurred for the purpose of the assessee's business. The assessee thereafter appealed to the Tribunal and it was contended on its behalf that as a result of the partition the assessee-firm succeeded to all the assets of the Hindu undivided family and that the expenditure claimed should be allowed. The Tribunal held that the expenditure was incurred by the Hindu undivided family and that the deduction was claimed by a partnership which was a different and distinct assessable unit and that since the expenditure had not been incu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n further appeal to the Tribunal and before the Tribunal the assessee's contention was that since mud was an essential raw material for the manufacture of bricks which should be either purchased from outside or extracted from own lands and that since the value of the mud extracted from own lands was valued on a notional basis and adjusted in the profit and loss account, the same should be allowed as revenue expenditure. The Tribunal held that deduction for the purpose of income-tax could be claimed only if the liability was actually incurred and that the assessee was not entitled to deduct an expenditure not really made or incurred by it during the previous year. It, therefore, confirmed the disallowance. For the assessment year 1968-69 cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that what was to be ascertained was the true profits from the business of manufacture of bricks. It was argued that the assessee had used in his business raw materials worth Rs. 1,372 and that if he had not supplied it from his own land, he would have had to pay the same price in the market for the commodity and that such a payment would have been allowed. The Tribunal rejected the assessee's claim. It observed : "The assessee's claim in effect is for depreciation of the land shown as his business asset and not for any expenditure actually incurred during the accounting year. In view of this position, we see no reason to interfere with the orders of the authorities below." The only question that has to be considered in all the three ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price of the land purchased. He has really not purchased any raw materials for cash and he cannot be allowed to claim a deduction of the supposed value of the earth taken out of the land as part of the property." In the present case also there is finding that there was no outgoing in cash. Therefore, the principle of this decision would squarely apply to the facts here. The learned counsel for the assesse, however, brought to our notice a decision of the Supreme Court in Commissioner of Income-tax v. Hantapara Tea Co. Ltd. [1973] 89 ITR 258 (SC). The assessee in that case was carrying on business in manufacture and sale of tea. It used in its business thatch, bamboo and fuel, etc., grown on its own lands. The agricultural income-tax au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t representing the value of the materials used in that case even though the said goods were his own. On the same analogy, the contention was that the notional value put on the mud in the present case should be allowed as deduction. The decision of the Supreme Court has no application to the facts here. That was a case where the Supreme Court was considering the question as to what was assessable under the Central Income-tax Act in relation to the assessment of income from tea business. The bamboo, thatch, fuel, etc., had been treated as having been sold to the tea business in the agricultural income-tax assessment made on the assessee and agricultural income-tax was consequently levied on the entire value of the thatch, bamboo and fuel, e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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