TaxTMI 
TaxTMI 
TaxTMI 
1975 (11) TMI 62
X X X X Extracts X X X X
X X X X Extracts X X X X
....amount as expenditure in the year of account. The total expenditure of the Head Office has been allocated to the assessee company in proportion to the income from the appellant company included in the total income of the Head Office. On this basis the assessee's share in the total expenditure of the Head Office was 3.97 per cent. The Head Office expenses included a sum of Rs. 39,356 for the period 1st Jan., 1968 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. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n rejecting the claim which is based on the proportionate expenditure of the preceding year. The objection contained on this ground, is rejected." 5. Before us the learned counsel for the assessee more or less reiterated the same points which were agitated before the learned AAC. It was also contended that the expenditure in question were incurred and as such the same is allowable. 6. The learned Departmental Representative supported the order of the AAC. 7. We have heard the parties and perused the material available on record. During the course of arguments we required the learned counsel for the assessee to produce any paper by which the head office confirmed the expenses for the period 1st Jan., 1968 to 31st March, 1968. The learned ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 record observed as under : "I am afraid, I cannot subsc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... business operations at the end of March, 1968." 12. Before us on behalf of the assessee the same contentions were raised which were agitated before the learned AAC. It was further contended that as a result of the dispute between the parties, the matter was referred to the Arbitrator and ultimately the Arbitrator gave the award in December, 1974. Thus it was contended that under these circumstances it is wrong to say that there was no business of the assessee during the year under consideration. 13. The learned Department Representative supported the order of the AAC. He also contended that the assessee was assessed as Resident Indian Company in the year of account. There was no business in the year of account as the business in India di....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... towards salaries and wages, rent, travelling and conveyance, insurance, audit fees, filing fees, miscellaneous expenses, sales-tax and deprecation along with should be allowed in full and disallowed the rest of the expenditure and (ii) further held that the assessee was not entitled to set off of business loss of earlier years carried forward." On reference, the Honourable High Court held as under:-- "the assessee company could not be said to be engaged in any business during the relevant year merely because in realising its assets it had earned interest on the outstandings or some profit in selling its stores and spares; and that the company was not, therefore, entitled to deduction of any expenditure other than that allowed by the Trib....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 sho....