TMI Blog1966 (3) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... ing accounting year being from the 1st of November, 1948, to 31st of October, 1949. For the assessee-company a piece of land was acquired under the Land Acquisition Act and the compensation was determined therefor, which was paid by the assessee. Since possession was taken of that land before the total compensation money, as finally determined under the Act, was paid, a sum of Rs. 22,438 was paid by the assessee as interest as required under section 34 of the Land Acquisition Act. The assessee claimed that payment as an expenditure to be deducted from his total income under section 10 of the Income-tax Act. He claimed the deduction particularly under sub-clause (iii) of clause (2) of section 10, which was disallowed by the Income-tax Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order passed by the Tribunal that they thought the position to be similar to interest payable on trade debts. But in that opinion also, they do not appear to have been confirmed because, after making that observation, they immediately said that if the deduction was not permissible under sub-clause (iii) of clause (2) of section 10, it was admissible under sub-clause (xv). On the facts of the case, the deduction cannot be permitted under sub-clause (iii), because the interest was not paid on any capital borrowed for the purposes of the business. Learned counsel appearing for the assessee wanted to establish that sub-clause (iii) of clause (2) of section 10 of the Income-tax Act would be attracted to the present case. But he could not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he land acquired. This part of learned counsel's contention is clearly sound. Next it is to be seen whether the requisite conditions as provided in clause (2)(xv) of section 10 of the Income-tax Act are satisfied in this case to permit the deduction claimed by the assessee. We have already seen that the payment of interest of Rs. 22,438 was not of the nature of capital expenditure. Whether it was spent wholly and exclusively for the purpose of the business of the assessee-company will depend for what purpose the land was sought to be acquired by the Government. Section 6 of the Land Acquisition Act provides that when the appropriate Government is satisfied that any particular land is needed for a public purpose, or for a company, a declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant sections, more particularly if the purpose of acquisition is not in connection with the purpose for which the company is incorporated. In that view of the matter, it has to be presumed in a case where the Government have acquired any land for a company that the purposes for which the acquisition was made, was for those mentioned in the Act itself, and the consent of the Government was given after a due enquiry held in that respect and an agreement was executed by the company with the Government. No doubt, this aspect of the question does not appear to have been considered by the Tribunal, but in view of the fact that there was no dispute that the land was acquired for the assessee-company by the Government under the Land Acquisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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