JAYASWAL INDUSTRIES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee that Income-tax Appellate Tribunal, Allahabad, has referred the following question for the opinion of this court ;

(2.) FROM Clauses (1) and (4) of the agreement it is evidently clear that the assessee was required to pay the arrears of rent in lieu of goodwill purchased from the earlier firm. However, for the previous year the assessee was allowed deduction. After considering the matter, we find that in fact what was paid by the assessee was not towards the arrears of rent for the period prior to dissolution of the partnership firm but for acquiring goodwill. Thus, the amount spent was a capital expenditure. We, accordingly, answer the question in the affirmative and against the assessee.