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TMI Blog1976 (4) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumstances of the case and looking to the nature of such expenditure as related to the consumption of stores and payment of wages, the Tribunal was right in law in holding that such expenditure to the extent of Rs. 26,321 represented expenditure of capital nature and not admissible for deduction under section 37 of the Income-tax Act, 1961 ? " The assessee, a registered firm, has two factories. One factory is engaged in the manufacture of tin containers of various sizes, while the other in manufacture of associated wire and wire products. A return was filed for the assessment year 1965-66 showing an income of Rs. 1,40,231. Thereafter, a return was filed on March 23, 1956, showing a total income of Rs. 2,05,131. The Income-tax Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee-firm for their personal properties and as such deleted, on estimate, an amount of Rs. 1,10,000 from stores consumed and wages paid. In appeal before the Appellate Assistant Commissioner, the assessee filed a summary of the expenditure under the two heads " Stores and wages ". After considering this fact, the Appellate Assistant Commissioner came to the conclusion that the Income-tax Officer erred in relying on the report of the consulting engineer as that report related to a point of time much anterior to the start of the accounting year relevant to the assessment year 1965-66. As respects the letter sent by the assessee to the bank, that too, in the view of the Appellate Assistant Commissioner, could not lead to the disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Commissioner, following the decision of the Supreme Court in the case of India Cements Ltd. v. Commissioner of Income-tax [1966] 60 ITR 52 (SC), allowed the expenditure. The Tribunal, however, held that the Supreme Court decision did not lay down a general proposition that all expenditure incurred by an assessee for setting up a new business was allowable. In this view of the matter, it remanded for investigation as to whether the loan was raised for a business which was not in existence and, therefore, whether the expenditure was allowable under any of the sections from section 30 to 37 of the Act. We will consider the second question first. We have already set out the items for the purchase of which the expenditure was incurre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cements Ltd. v. Commissioner of Income-tax [1966] 60 ITR 52 (SC) inasmuch as the object for which the loan is raised is inconsequential, the question referred should be answered. We do not want to express any opinion as to whether the decision in India Cements Ltd.'s case [1966] 60 ITR 52 (SC) would be applicable to the facts of the present controversy, for, in the present case, the Tribunal has not recorded any finding as to the essential facts which led to the taking of the loan. No doubt the circumstances in which the loans were taken appear in the argument of the assessee raised before the Tribunal, but the Tribunal has not recorded any finding as to whether the facts alleged by the assessee were correct or not. In this view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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