| Case ID |
1fd11be5-8dc5-4e3a-ba16-f19ac439daa9 |
| Body |
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| Case Number |
I.T. REFERENCE No. 157 OF 1972 |
| Decision Date |
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| Hearing Date |
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| Decision |
The Tribunal held that the ship, acquired by the assessee in the course of its business, constituted stock-in-trade, and the amounts spent for its maintenance were allowable as revenue expenditure. The case was decided in favor of the assessee, confirming that the expenditure incurred on the maintenance of the ship was admissible for income computation. The court ruled that regardless of whether the ship was a capital asset or stock-in-trade, the incurred expenses were necessary for business operations, thus qualifying for deduction. |
| Summary |
This case revolves around the allowance of business expenditure under Section 37(1) of the Income-tax Act 1961. The assessee company, engaged in the import and sale of commodities, advanced a loan to its sister concern secured by the mortgage of a ship. After the sister concern went into liquidation, the assessee acquired the ship and sought to deduct maintenance expenses as business expenditure. The Tribunal recognized the ship as stock-in-trade and granted the deduction. This ruling emphasizes the importance of proper classification of assets in tax law, particularly in the context of business expenses and revenue generation. The decision highlights key considerations for businesses regarding asset management and tax deductions, relevant for entities involved in similar financial transactions. |
| Court |
Bombay High Court
|
| Entities Involved |
|
| Judges |
M.N. Chandurkar,
M.H. Kania
|
| Lawyers |
R.J. Joshi,
R.L. Butani,
Dinesh Vyas,
S.S. Shetty
|
| Petitioners |
Addl. Commissioner of Income Tax
|
| Respondents |
Putco (P.) Ltd.
|
| Citations |
1983 SLD 682 = (1983) 140 ITR 740
|
| Other Citations |
Himatlal Motilal and Ramanlal Lallubhai v. CIT [1932] 6 ITC 159 (Bom.),
H. Mohmed & Co. v. CIT [1977] 107 ITR 637 (Guj.),
A.H. Wadia v. CIT [1949] 17 ITR 63 (FC),
All India Reporter Ltd. v. CIT [1963] 49 ITR 196 (Bom.),
CIT v. Malayalam Plantations Ltd.,[1964] 53 ITR 140 (SC),
Pandit Narain Dutt Chhimwal v. CIT [1972] 83 ITR 413 (SC),
Saharanpur Electric Supply Co. Ltd. v. CIT [1971] 82 ITR 405 (All.)
|
| Laws Involved |
Income-tax Act 1961
|
| Sections |
37(1)
|