TMI Blog1980 (8) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 1971-72. The assessee is a registered partnership firm and carries on the business of giving on hire, loud-speakers, film projector, stage lighting, cine-photography and repairing of electronic equipments, radio sets, etc. The office of the firm was situated at Sankdi Sheri Naka, Ahmedabad, since last 30 years and the area available was 180 sq. ft. The assessee, therefore, took on lease land at Relief Road, Ahmedabad. The land was taken on lease on April 1, 1970, and the assessee started construction of the show-room and office building on the area admeasuring 1,470 sq. ft. The construction work was started in May, 1970, and it was completed in March, 1973. The assessee claimed to have started the use of this new office and the showroom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e city. The new construction of the office and show-room was completed after two years from the end of the previous year in question and, therefore, the impugned expenditure could not be said to be incurred wholly and exclusively for the purposes of the business. The Commissioner held that the deduction granted by the ITO was erroneous and he set aside the order of the ITO and directed him to recompute the income of the assessee after disallowance of the impugned expenditure. Against the decision of the Commissioner, the assessee filed an appeal before the Income-tax Appellate Tribunal and again relied on the judgment in IRC v. Falkirk Iron Co. Ltd. [1933] 17 TC 625 and reliance was also placed on a decision of the Supreme Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be borne in mind that the amount of Rs. 12,600 was not premium which was paid for acquiring the plot of land in question. What was paid was periodical rent which was being paid from time to time and the aggregate amount of rent for the entire year under consideration came to Rs. 12,600. Therefore, the sole question that arises is whether, in the facts as found by the Tribunal, this would be an expenditure wholly and exclusively for the purposes of the business of the assessee. A Division Bench of this Court in CIT v. Alembic Glass Industries Ltd. in Income-tax Reference No. 58 of 1971, decided on 47-7-1972 (to be found at page 1 of Direct Tax Laws-unreported judgments of Gujarat High Court (1960-74) published by Chartered Accountants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the assessee was to put up a show-room and office building on the land in question. Under these circumstances, it cannot be gainsaid that though the land was not immediately put to use in the two years under consideration, the amount of Rs. 12,600 spent in each of the two years under reference was for the purpose of the business of the assessee. It was spent wholly and exclusively for the purpose of the business of the assessee so that the assessee could ultimately have larger office premises where its business could be carried on in a better manner and more efficiently. Over a period of years the assessee was occupying a small office admeasuring 180 sq. ft. The assessee was now getting much larger space admeasuring 1,470 sq. ft. Hen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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