| Case ID |
e1121146-6e23-48c0-96ca-842c945a4507 |
| Body |
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| Case Number |
CIVIL APPEAL No. 1928 OF 1968 |
| Decision Date |
Aug 27, 1971 |
| Hearing Date |
|
| Decision |
The Supreme Court of India ruled that the expenditure incurred by the assessee for contributions to the cane development council was allowable as a deduction under Section 37(1) of the Income-tax Act, 1961. The Court found that the contributions were made under statutory obligation to facilitate the transportation of sugarcane to the factory, and thus were incurred for running the business rather than for obtaining an enduring benefit. The appeal was allowed in favor of the assessee, overturning the decisions of the revenue authorities and the Tribunal. |
| Summary |
In the landmark case of Lakshmiji Sugar Mills Co. (P.) Ltd v. Commissioner of Income Tax, the Supreme Court of India addressed the issue of whether contributions made to a cane development council could be classified as a deductible business expense under the Income-tax Act, 1961. The case stemmed from the assessment year 1956-57, where the assessee, engaged in sugar manufacturing, was compelled by law to contribute to road development for transporting sugarcane. The Court emphasized the importance of commercial expediency in determining the nature of the expenditure, ultimately ruling that the contributions were indeed allowable deductions as they were essential for the operation and efficiency of the business. This decision has significant implications for businesses making similar contributions under statutory obligations, reinforcing the principle that expenses incurred for facilitating the business operations can qualify as revenue expenditures. Keywords include 'Income-tax Act', 'business expenditure', 'deductible expenses', 'Supreme Court rulings', 'commercial expediency', and 'sugar manufacturing'. |
| Court |
Supreme Court of India
|
| Entities Involved |
Lakshmiji Sugar Mills Co. (P.) Ltd,
Cane Development Council
|
| Judges |
K.S. Hegde,
A.N. Grover
|
| Lawyers |
D.K. Bajaj,
K.B. Rohatgi,
S.T. Desai,
P.L. Juneja,
R.N. Sachthey,
B.D. Sharma
|
| Petitioners |
Lakshmiji Sugar Mills Co. (P.) Ltd
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1971 SLD 661 = (1971) 82 ITR 376
|
| Other Citations |
CIT v. Hindustan Motors Ltd. [1968] 68 ITR 301 (Cal.),
CIT v. Royal Calcutta Turf Club [1961] 41 ITR 414,
Assam Bengal Cement Co. Ltd. v. CIT [1955] 27 ITR 34
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
37(1)
|