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TMI Blog1966 (9) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... on 66A(2) of the Indian Income-tax Act, 1922, arises under the following circumstances : During the calendar year 1954, which was the previous year relating to the assessment year 1955-56, the appellant worked as a paddy procuring agent under the Government of Orissa on the basis of an agreement entered into by the appellant and the Government of Orissa. Under that agreement, the appellant was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion from the bills. The appellant claimed deduction of this amount from the assessable income under section 10(1) of the Income-tax Act. The claim was negatived by the Income-tax Officer and the Appellate Assistant Commissioner, but was accepted by the Income-tax Appellate Tribunal. The Tribunal held that this amount of Rs. 25,700 deducted by the Government from the bills of the appellant could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quality goods, and that such penalty could not be said to be an expenditure incurred wholly and exclusively for the purpose of the business. It is quite obvious that the High Court, in answering the question on this basis, misdirected itself and totally misunderstood the question that was referred to it for opinion by the Tribunal. The appellant had at no stage contended that the Tribunal had wron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not refer to any deduction. Section 10(1) lays down that the tax shall be payable by an assessee under the head " profits and gains of business, profession or vocation " in respect of the profits or gains of any business, profession or vocation carried on by him. In these circumstances, what the appellant had claimed was that, in the computation of profits and gains of business, profession or vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s liable to be excluded when computing the income under section 10(1) of the Act. The decision given by the High Court is, therefore, liable to be quashed and a direction is necessary to the High Court to answer the question really referred to it. The appeal is consequently allowed with costs and the judgment of the High Court is set aside. The case will now go back to the High Court for answerin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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