TMI Blog1978 (11) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, a registered firm, besides doing business in mica mining, did business in manganese ore. Manganese ore was being exported outside India and this business was being conducted from Calcutta. During the relevant accounting year ending on March 31, 1962, the business of manganese ore came to be fully controlled by the State Trading Corporation of India (hereinafter to be called "the Corporation"). The assessee then entered into a contract with the said Corporation on October 18, 1960, to import paper on its behalf, against which it would be entitled to export manganese ore. It was a barter system under which paper would be imported of the value of the manganese ore exported. In terms of the said agreement dated October 18, 1960, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f interest and of the letter of credit commission was not necessitated by business needs and consequently could not be deducted as a business expenditure. The Tribunal found as a fact that the assessee's business in manganese ore was fully controlled by the Government of India and had it not agreed to import paper for the Government of India, it would not have got the licence to export manganese ore. The export of manganese ore was thus not only related to the assessee's export activities but was also dependent upon the import of paper. The Tribunal held that the business of import of paper was quite incidental and related to the export business of manganese ore and both of them constituted the same business. The Tribunal, therefore, uphe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for the department ought not to be permitted to be raised. I think Mr. Jain, learned counsel for the assessee, is right in saying that the allowability or otherwise of the said sum of Rs. 1,04,290 has not been considered at any stage of the case from the angle as to whether it was a capital expenditure. The said claim has been considered from only one angle, namely, whether it was an expenditure incurred by the assessee in relation to its business. Such being the position, the argument made by the learned counsel for the department relating to the nature of the expenditure must be left out of consideration. Fact of the matter is that even the question of law, which has been referred to this court for opinion, does not raise any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sertion of hostile title; it may also comprehend payment of statutory dues and taxes imposed as a pre-condition to commence or for carrying on of a business; it may comprehend many other acts incidental to the carrying on of a business. However wide the meaning of the expression may be, its limits are implicit in it. The purpose shall be for the purpose of the business, that is to say, the expenditure incurred shall be for the carrying on of the business and the assessee shall incur it in his capacity as a person carrying on the business." In the instant case, the facts found are that, (i) the payment of interest and of the letter of credit commission was incidental to the assessee's business in manganese ore, (ii) the expenditure had ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat their values balanced each other. It would, therefore, be wrong to think that the expenditure incurred, though for the purpose of paying up the value of the printing paper imported, was not an expenditure incurred for the purpose of manganese ore business. It has been urged that it was no part of the assessee's obligation to bear such an expenditure as the one in question--rather the expenditure should have been borne by the Corporation. This part of the argument is not at all borne by any of the terms of the said agreement dated 18th October, 1960. All that the agreement says is that the purchase of the printing paper shall be of such value as may balance the value of the total exports of manganese ore. The printing paper imported i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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