https://www.taxtmi.com/caselaws?id=61741 Gratuity and retrenchment compensation paid on closure of a business were held not deductible in computing business income because the decisive test was whether the expenditure was incurred for carrying on the business. A liability arising solely from the termination of the business, even if statutory in nature, is not a proper business outgoing when it is not incurred in the course of business operations. The distinction between gratuity and closure-related compensation was rejected, as both obligations arose contemporaneously with the shutdown. Authorities allowing deduction were distinguished on their facts, where the business continued or the payment flowed from a pre-existing obligation. The claim for deduction therefore failed. en-us Thu, 17 Nov 1983 00:00:00 +0530 Fri, 14 Jan 2011 16:11:10 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=61741 Gratuity and retrenchment compensation paid on closure of a business were held not deductible in computing business income because the decisive test was whether the expenditure was incurred for carrying on the business. A liability arising solely from the termination of the business, even if statutory in nature, is not a proper business outgoing when it is not incurred in the course of business operations. The distinction between gratuity and closure-related compensation was rejected, as both obligations arose contemporaneously with the shutdown. Authorities allowing deduction were distinguished on their facts, where the business continued or the payment flowed from a pre-existing obligation. The claim for deduction therefore failed. Case-Laws Income Tax Thu, 17 Nov 1983 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=61741