TMI Blog1985 (2) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of the case, we are satisfied that no direction to refer the said question need be given in this case. The assessee in this case is a manufacturer of sugar. While completing the assessment for the year 1976-77, the Income-tax Officer disallowed a sum of Rs. 60,000 being the amount given to the employees' co-operative stores which could not be recovered. The said employees' co-operative stores was established for the supply of rice, provisions and other articles to the employees of the factory. It was administered by a managing committee of 12 members with the general manager of the factory as ex-officio president. The day-to-day management of the stores was carried on by the paid staff of the stores. The assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On appeal, the Commissioner of Incometax (Appeals) held that the assessee having decided to write off the amount due to it only in the previous year relevant to the assessment year under consideration, it cannot be considered as a loss arising during the earlier years and, therefore, it should be allowed as a deduction on account of commercial expediency. The Revenue took the matter in appeal to the Appellate Tribunal. The Appellate Tribunal held that the advances made by the assessee to the employees' stores in the course of its business is welfare expenditure and that the advances were found irrecoverable only during the previous year and the loss should be considered to be a business loss sustained during that year and, therefore, it s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch it is placed before us by the Revenue. Once it is found that the assessee on receipt of the auditor's report regarding the affairs of the stores found that it is not able to recover a sum of Rs. 60,000 and writes off the same, it should be taken to be a business loss. Though the learned counsel for the Revenue says that the loss, if any, is the loss of the stores and not the loss of the assessee, we are not in a position to agree with this contention, for, the running of the stores for the supply of rice, provisions and other articles to the workmen concerned is a welfare measure which the assessee had to undertake to keep the workmen contented. Therefore, the expenditure incurred for enabling the stores to carry on the supply of rice an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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