TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Oil mill not separate business, retrenchment compensation deductible under Income-tax Act</h1> <h3>Commissioner Of Income-Tax Versus PI. Simon</h3> Commissioner Of Income-Tax Versus PI. Simon - [1991] 187 ITR 302, 56 TAXMANN 224 Issues Involved:The judgment addresses two main issues: 1. Whether the oil mill operated by the assessee constitutes a separate business or is part of the same business involving oil and oil seeds.2. Whether the payment of retrenchment compensation is allowable as a deduction under section 37 of the Income-tax Act, 1961.Issue 1 - Oil Mill Business Classification:The Commissioner of income tax contended that the oil mill was a separate business and not part of the assessee's main business, leading to the disallowance of retrenchment compensation as a deduction. The Appellate Tribunal applied the tests laid down by the Supreme Court to determine if the oil mill was a separate business. It found unity of control, interlacing of funds, and centralized finance from the head office, concluding that the oil mill was only a branch and not a separate business. The Tribunal's decision was upheld by the High Court, emphasizing that the maintenance of separate accounts alone does not establish a separate business entity.Issue 2 - Deductibility of Retrenchment Compensation:The Appellate Tribunal held that the payment of retrenchment compensation was a permissible deduction under section 37 of the Income-tax Act as it was necessitated by the closure of the oil mill, which served the purpose of the business. The Tribunal's decision was supported by the High Court, stating that the compensation was allowable as a deduction since it was incurred for the business's benefit.The High Court affirmed the Tribunal's findings, stating that the Tribunal correctly applied the Supreme Court's tests and there was no error of law in the decision. The Court emphasized the unity of control and interlacing of funds as key factors in determining that the oil mill was not a separate business. The judgment favored the assessee, allowing the retrenchment compensation as a deductible expense under section 37 of the Income-tax Act.
TaxTMI 