https://www.taxtmi.com/caselaws?id=21773 Retrenchment compensation paid after a company resolved to wind up voluntarily was not deductible under section 37(1) of the Income-tax Act, 1961, because the expenditure arose from closure of the business and not from carrying it on. Once the special resolution for winding up was passed, the company ceased ordinary business activity except as needed for beneficial winding up, and the liability to discharge employees was incurred to facilitate closure and settle obligations, not to earn profits. Expenditure connected with winding up does not satisfy the statutory requirement of being laid out wholly and exclusively for the purpose of business. en-us Thu, 05 Jul 1990 00:00:00 +0530 Sat, 28 Nov 2009 16:08:31 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=21773 Retrenchment compensation paid after a company resolved to wind up voluntarily was not deductible under section 37(1) of the Income-tax Act, 1961, because the expenditure arose from closure of the business and not from carrying it on. Once the special resolution for winding up was passed, the company ceased ordinary business activity except as needed for beneficial winding up, and the liability to discharge employees was incurred to facilitate closure and settle obligations, not to earn profits. Expenditure connected with winding up does not satisfy the statutory requirement of being laid out wholly and exclusively for the purpose of business. Case-Laws Income Tax Thu, 05 Jul 1990 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=21773