TMI Blog1993 (9) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of discontinued contract business resulting from arbitration award. The Assessing Officer disallowed the expenditure for two reasons. One is that vouchers but for payment of Rs. 15,000 paid to Mrs. Sudha Kapur, lawyer being daughter of one of the partners, had not been produced by the assessee to support the claim. The Assessing Officer also disallowed the claim on the ground that under section 176(3A) the entire sum received was assessable to tax and there was no scope for allowing any deduction in respect of the income. 2. The learned CIT(A) observed that assessee had furnished confirmation from Mrs. Sudha Kapur in regard to the expenditure of Rs. 55,000 and if the Assessing Officer was dissatisfied with the evidence furnished he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of amount paid to Mrs. Sudha Kapur was allowed as a deduction. For the year under appeal, though assessee had agreed to pay 40% of the amount awarded to Mrs. Sudha Kapur she was persuaded to accept lesser amount as the amount payable to her as agreed was substantial. There was thus, no justification for disallowance of the expenditure in the year under appeal. 5. We have given our careful consideration to the rival contentions. It is well established principle of law that expenditure incurred in respect of discontinued business is not allowable as a deduction. The issue involved in this case, however, is somewhat different. The real issue involved is as to whether under section 176(3A) the entire receipts are taxable or is it t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o account the expenditure incurred in respect of the receipt. Therefore, on true interpretation of section 176(3A) the sum which is includible as income is the net income computed after taking into account the expenditure incurred for receiving such income. 6. In the present case, assessee has incurred expenditure of Rs. 55,000 for earning the amount of award. This is supported by evidence and the mere fact that the recipient is the daughter of one of the partners of the firm would not be a ground for making the disallowance in the absence of a finding that the expenditure incurred was excessive or unreasonable having regard to the services rendered. The authorities cited on behalf of the revenue are in a different context and not in rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e High Court held that for computing the income of the assessee for the purposes of assessment of tax under the Act, the expenditure was necessarily to be excluded from the amount that was received by the assessee and the view taken by the Tribunal was justified and that no question of law arose from it. 7. The decision of the CIT (A) in allowing expenditure in respect of the awarded sum in the case of the assessee being in consonance with the decision of the Rajasthan High Court in the case of Foresole Ltd., we uphold the same and decline to interfere. 8. In the result, appeal of the revenue is dismissed. 9. The cross-objection filed by the assessee is merely supporting the order of CIT(A). No separate relief has been sought. The sam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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