TaxTMI 
TaxTMI 
1975 (11) TMI 62
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....68 to 31st march, 1968. These expenses were claimed on the basis f the previous year's average. But the ITO observed that during these three months there was no income to the company and no income was included in the head office account. Thus the learned ITO was of the view that the basis of the calculation of the expenses is absent. The learned ITO also found that the Head Office has not sent any details of the expenses allotted to the company for these three months. Consequently, he disallowed the claim of Rs. 39,356. 3. Before the learned AAC in appeal it was submitted that the Head Office did not send the details of expenses allotted to the appellant company for the months from January to March, 1968 and as such the appellant company on the basis of the previous debit upto December, 1967 adjusted the expenditure from January to March, 1968 on proportionate basis. According to him, it was wrong on the part of the ITO to presume that there was no expenditure on Head Office during January, 1968 to March, 1968. According to the learned counsel the expenses related to the business of the assessee as such the entire claim should have been allowed. 4. The learned AAC after consi....
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....the asst. yr. 1969-70. The learned ITO after considering the material on record computed the total income at Rs. 3,28,077. 10. Before the learned AAC in appeal on behalf of the company it was submitted that the appellant company being a non-resident company had entered into contract for drilling operations with the Oil and Natural Gas Commission in the year 1964. At the end of March, 1968 the work under the contract was over but the bil's and certain claims preferred by the assessee-company were pending before the ONGC. According to the learned counsel for the assessee, there had been a number of disputes and disagreements between the assessee and ONGC over the said claims made by the company and at last the matter went to arbitration as per the terms of the contract between both the parties. Thus it was explained that the assessee had to maintain office in India to process the arbitration proceedings and to represent their claims before the arbitrator so that it could claim expenditure. The amount receivable as a result of arbitration award would be taxable as income and as such there was business in the year of account. 11. The learned AAC after considering the material on ....
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.... activity capable of producing a profit which can be taxed. The learned Departmental Representative also relies on the ratio of decision in the case of: 1. Indraprastha Steel Industries Ltd. vs. ITAT, New Delhi (1973) 88 ITR 138; 2. L.M. Chhabda and Sons vs. CIT., Gujarat (1967) 65 ITR 638; and 3. CIT Punjab vs. Lahore Electric Supply Co. Ltd. (1966) 60 ITR 1. 14. We have heard the parties and perused the material available on record. In the decision, Indraprastha Steel Industries Ltd., the brief facts were as under : "The assessee-company, which was doing business in the manufacture of steel forgings and castings closed down the business and sold the machinery. During the accounting period relevant to the asst. yr. 1967-68 the assessee had an income of Rs. 913 under the head "interest" and income of Rs. 318 by way of profit on the sale of stores and spare parts. It made no purchases, it had not spent any amount on stores and spares consumed, and had stock in possession. The assessee was realising its dues and earned interest on the outstanding from the purchasers of the machinery. The Tribunal found that the business of the assessee had been brought to a close, that....
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.... as resident Indian company in India. This company entered into a contract for drilling operations with ONGC in the year 1964. This business was discontinued in India on 30th April, 1967. The assessee neither before the authorities below nor before us produced any evidence from which it could be said that the said business was discontinued in the year of account or there was any intention on the part of the assessee to resume the business. The very fact that in order to settle certain disputes, the assessee had to maintain office in India would not be sufficient to constitute a business within the meaning of the provisions of the IT Act, 1961. It is undisputed fact that prior to the year under consideration the contract work for drilling of oil in Jaisalmer area in Rajasthan was over. There is also no evidence on record to show that during the year of account there was nay income to the assessee company from the said business. Thus from the evidence on record it is proved to the hilt that there was no activity in the year of account capable of producing profit which can be taxed. The assessee company also produced no evidence which may go to show that the business of drilling opera....