1978 (4) TMI 113

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....(i) Disallowance of retrenchment compensation in freezing plant Rs. 2,652:— It was disallowed by ITO and sustained by AAC on the reasoning that it is paid for closure of business. But the fact that it is for closure of business is not a correct fact. It is true that the business was stopped with effect from 31st Dec., 1971. The business was closed only then and retrenchment compensation on such ....

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....s that view of ours. For certain reason or other the assessee terminated the services of these employees. It is an ordinary Act of management in the course of business. So it is a legitimate payment for purposes of carrying on the business and not for the closure of the business. We find accordingly. Allow this as a deduction. 2. (ii) Fishing boat repair expenses Rs. 6,043 : The ITO and the AAC....

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....e and the boat repairer in the matter of boat maintenance. As and when repairs are being done it used to be adjusted against their dues. So on the first day of the accounting year after adjustment of their dues a sum of Rs. 6,042 was due from these repairers to the assessee. In this also the same practice continued. On the date of closing of the business a sum of Rs. 6,042 was still outstanding fr....