https://www.taxtmi.com/caselaws?id=37695 Retrenchment compensation paid on closure of a business was treated as a contingent liability arising only on cessation of operations, not as an expenditure incurred wholly and exclusively for the purposes of the business. Applying the governing Supreme Court principle that closure is materially indistinguishable from transfer for this purpose, the Allahabad HC held that such liability does not arise in the ordinary course of carrying on the business and is therefore not a revenue deduction under section 37 of the Income-tax Act, 1961. The issue was decided against the assessee and in favour of the Revenue. en-us Mon, 30 Oct 1978 00:00:00 +0530 Wed, 31 Mar 2010 15:25:47 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=37695 Retrenchment compensation paid on closure of a business was treated as a contingent liability arising only on cessation of operations, not as an expenditure incurred wholly and exclusively for the purposes of the business. Applying the governing Supreme Court principle that closure is materially indistinguishable from transfer for this purpose, the Allahabad HC held that such liability does not arise in the ordinary course of carrying on the business and is therefore not a revenue deduction under section 37 of the Income-tax Act, 1961. The issue was decided against the assessee and in favour of the Revenue. Case-Laws Income Tax Mon, 30 Oct 1978 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=37695