1981 (9) TMI 92

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....see in this income-tax reference, is a company carrying on business in the manufacture of carding engines, draw frames, ring frames and cone winding machines. The assessee had to import certain materials as component parts for the purpose of manufacturing carding engines. The imports had to be made under import licences obtained under a peculiar scheme. The licences were to be applied for throu....

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....he assessee's part. The assessee then claimed the sums so written off as admissible deductions in the computation of its taxable business profits. The ITO disallowed the claim. The Tribunal, before which the matter ultimately came for consideration, held that the assessee was entitled to the deduction claimed. The Tribunal rejected the department's contention that the write-off was not incidental ....

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....ary, the figures represented the amounts written off as items of revenue loss. They represented portions of advance premiums in deposit with the Federation which were forfeited, when within the import licence period, the assessee failed to effect the imports. The forfeited amounts were lost to the assessee, with the expiry of the period of the licence. Under the I.T. law, allowance for losses i....

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....ences, under which the assessee had to pay premiums to the Federation in advance covering the entire import entitlement. Owing to business exigencies, the assessee could not fully utilise the import entitlement, resulting in a forfeiture of part of the advance deposit with the Federation. The Tribunal, therefore, felt no difficulty in finding that the deduction claimed by the assessee in writing o....