TMI Blog1993 (12) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance of Rs. 85,008 made by the Income-tax Officer on account of the provision for payment of electricity charges to the Rajasthan State Electricity Board?" The brief facts of the case are that the assessee, a partnership-firm, was carrying on the business of re-rolling of billets and spurn and manufacturing of iron rods, angles, plates, fish-plates, etc., at Bundi. During the year under consideration, i.e., ending on March 28, 1977, no manufacturing activities were carried on. The assessee-firm had debited an amount of Rs. 48,888 to the profit and loss account. A provision was made in the books of account for payment of electric charges. During the course of the assessment, it was found that the assessee was making the payment of mini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circle, has written a letter to the Executive Engineer, Kota, on June 28, 1977, that the connection of the assessee may be transferred from Bundi to Jaipur, if the assessee makes payment of the earlier minimum electricity charges for which the facility of making the payment in instalments was also sought by the assessee. The Tribunal came to the conclusion that the business was not discontinued altogether and the electric connection at the Jaipur factory would not have been possible unless payment of the minimum charges was made. Relying on the decision in the case of Karsondas Ranchhoddass v. CIT [1972] 83 ITR 1 (Bom), the appeal was allowed and the disallowance was deleted. Mr. G. S. Bapna has contended that because there was no manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee had not given up his intention to do further business. There may be a long period of inactivity and still the business may continue. The Madras High Court in L. VE. Vairavan Chettiar v. CIT [1969] 72 ITR 114 has held that where the assessee was maintaining the establishment and was waiting for improved market conditions in arecanuts and there was nothing to show that he completely abandoned or closed the business forever, the business must be deemed to be continuing. It was further observed that the company may not obtain or be able to execute a single business contract for months and yet it may be deemed to be to carry on its business, if during the period of lull and inactivity it is kept alive and if it retains its register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 85,008 in respect of minimum charges payable to the Electricity Board for which it was billed. The said expenditure was not a capital expenditure and was for keeping the business alive, it was not a case of complete closure of business and the same unit which was earlier working at Bundi was shifted to Jaipur. If any payment has been made when the factory is in the process of shifting from one place to another, in respect of minimum charges of electricity, it cannot be said that the said expenditure is either of capital nature or is personal expenses. The exclusion clause of section 37 is not applicable and the expenditure has to be considered wholly and exclusively for business purposes. An expenditure which is for keeping the business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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