TMI Blog2001 (4) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was running a flour mill. The assessee submitted before the AO that on account of deteriorating business condition, the assessee declared a closure in its flour mill after running the same for a period of two months only, viz., April and May, 1992, during the year under consideration. All the payments were claimed to have been made to the various workers and employees due to the said closure. The AO was, however, of the opinion that since the assessee had closed its business of running the flour mill, the expenses incurred by the assessee towards making payments to the erstwhile workers by way of gratuity, retirement benefit, etc. had not been incurred wholly and exclusively for the purpose of running the business of the assessee. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was also pointed out that in addition to the milling of the assessee's own stock of wheat, the assessee also carried on milling of wheats on behalf of the Government of West Bengal, also. In this regard, references were also made to the periodical returns furnished by the assessee with the Director of Rationing, Government of West Bengal, every month not only during the year under consideration but also in the subsequent period. It was furthermore pointed out that the plant and machinery and other assets of the assessee were not at all sold out and were on the other hand, run by the assessee. It was again pointed out that the senior staff members of the mill and also the office staff were not at all disturbed. It was thus contended tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different authorities, total "closure" of the operations of the assessee from 1st Feb., 1993, was mentioned. On the other hand, the learned counsel for the assessee reiterated all the facts submitted before the CIT(A) and pointed out that the flour mill actually worked in the subsequent two years. So far as the genuineness of the payments is concerned, the learned counsel for the assessee pointed out to the audited books of accounts and other documents including vouchers, etc. maintained by the assessee and claimed that the genuineness of the payments could not at all be doubted. 4. In support of his contention that in the circumstances, the claim of the assessee towards allowability of the expenditure under s. 37 is acceptable, the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cutta High Court in this case that payment made to remove the possibility of a recurring disadvantage cannot be considered as a payment made acquired and enduing advantage so as to be considered a capital expenditure. CIT vs. Eskaps India (I) (P) Ltd. (1991) 191 ITR 674 (Cal); and CIT vs. Delhi Safe Deposit Co. Ltd. (1982) 26 CTR (SC) 411 : (1982) 133 ITR 756 (SC). The Hon'ble Delhi High Court held in this case that the expenditure incurred on the preservation of a profit-earning asset of a business is always a deductible expenditure. 5. The crux of the problem seems to be whether there was a permanent closure of the business of the assessee and in that way the payments to the workers were made after the said closure. The eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the learned CIT(A) in deleting the disallowance. 6. The next issue relates to the question of treatment of an amount of Rs. 1,77,752 under the head "commission", as income from other sources. In its accounts, the assessee disclosed the above sum as commission receipt from M/s. Regency. Confirmation certificate in that regard was filed. However, in response to the summons issued by the AO under s. 131, the partner of M/s. Regency failed to appear. It was submitted by the assessee that the assessee-firm procured orders from Indian Oil Corporation on behalf of M/s. Regency and thereby earned the commission income. The AO however, found out that the assessee had not rendered any similar service in past nor were such services rende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come not assessable under the head under which it has been claimed by the assessee. Accordingly, the CIT(A) directed the AO to treat the commission income as business income. 8. This is not the case of a claim of commission payment by the assessee. On the other hand, the assessee has merely shown receipt of commission and in that regard not only full particulars but also a certificate from the payer concerned was also furnished before the AO. Simply because the payer did not respond to the summons issued by the AO under s. 131, it cannot be said that the receipt of commission was not there. Again, if the AO believed that the assessee had not received any commission income from M/s Regency, he should have neglected that income instead of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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