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1987 (4) TMI 121
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.... taken over the proprietary business of Shri Ghanshyam Shete who was running the business under the name and style of M/s. Hardease Engg. Works. During this year the assessee paid on 22-6-1982 a sum of Rs. 15,000 to one Shri Vallabhdas V. Mistry in full and final settlement of all his claims regarding his services with the erstwhile proprietary business of Shri G.S. Shete. The said Shri V.V. Mistr....
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....titled to Rs. 13,050 with future interest at 6% per annum and also Rs. 1,100 towards cost of suit. The assessee paid Rs. 15,000 to Shri V.V. Mistry on 22-6-1982 which was claimed as deduction. The Income-tax Officer disallowed the claim on the ground that this is in the nature of a terminal settlement and is capital expenditure. On appeal, the Commissioner of Income-tax (Appeals) upheld the same. ....
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....took over the proprietary concern. On a perusal of clauses 4, 5 & 10 of the sale agreement it is evident that the assessee's responsibility to discharge the liabilities due from the proprietary concern of Shri Shete relates directly from the scheme of the take over of the entire business as a going concern. Hence the payment to Shri V.V. Mistry cannot be said to be an expenditure arising in the co....