2009 (6) TMI 3

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..... right in law in holding that the interest paid of Rs.1,66,959/- for discounting the bills with the banks during the course of the business activities was not allowable in computing the business income under Section 37 of Income-Tax Act, 1961?" 2. The facts involved in both the applications are common, the issue involved is identical, so the single judgment will dispose of both the reference applications. However, for the sake of clarity the facts are borrowed from Reference application no.345 of 1995. THE FACTS : 3. The statement of the case reveals that assessee company derives income from business of hiring machinery and sale and purchase of yarn and fabrics. The assessee company filed a return of income for the assessment year 1983-84 .....

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..... e assessee contends that the impugned order of the Tribunal is palpably wrong since the Tribunal failed to take into account the business expediency requiring to make immediate payment resulting in necessity of bills discounting. He further submits that so far as the factum of discounting of bills are concerned, all these bank transactions are held to be genuine one. He further submits that the term "for the purpose of business and commercial expediency" is one of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. According to him, the expenditure may not have been incurred under any legal obligation, but it is allowable as business expenditure; if it is incurred on grounds of commercial e .....

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..... contra, Mr.Gupta learned counsel for the Revenue strongly opposed the submissions canvassed on behalf of the assessee. He tried to distinguish both the orders on which the reliance was placed by Mr.Mistry. However, faced with the absence of challenge with the order of Tribunal for the subsequent assessment years in the case of assessee itself and also in case of Anil Fabrics Ltd. (referred supra), he could not take his submissions to a logical end. CONSIDERATION : 11. Having heard both the parties without going into the legal niceties involved, if the Revenue has accepted the order of the Tribunal in the case of the assessee itself for subsequent assessment years in the identical facts and circumstances of the case, in that event it is n .....

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