SANKRANTI AGARBATHI CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal has referred the following questions of law in respect of the assessment year 1983-84 under Section 256(1) of the Income-tax Act, 1961.

(2.) THE assessee is a firm carrying on trade in Bangalore. It had entered into contract with a trust to purchase a property but the trust did not convey the property. THE assessee instituted a suit during the previous year and expended a sum of Rs. 60,000 which it claimed in the revenue field. In appeal, the Commissioner of Income-tax (Appeals) deleted the sum of Rs. 60,000 which was disallowed by the Assessing Officer. THE Revenue thereupon went in appeal before the Tribunal challenging the order of the deletion. THE Revenue contended before the Tribunal that the expenditure claimed by the assessee was unmistakably in the capital field, whereas the assessee contended that the expenditure was incurred in connection with the business and therefore was allowable in the revenue field.

(3.) THE decision of the Madras High Court in the case of Ghansham Singh , was also relied upon.