2007 (3) TMI 237

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.... of the Commissioner of Income-tax by holding that the various expenses like salary and wages bonus, rent, railway siding expenses, labour and welfare expenses, interest and law charges cannot be said to have been incurred to keep the status of the company as company alive?" 2. The reference relates to the assessment year 1978-79. 3. Briefly stated, the facts giving rise to the present reference are as follows : 4. The assessee is a public limited company. Its accounting period in the assessment year under consideration ended on September 30, 1977. In respect of the aforesaid assessment year, the assessee filed a return of income declaring loss of Rs. 72,37,820 on August 1, 1978, including the loss brought forward from the earlier ....

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....the present case, it is difficult to say that there was lull in business. For many past years the assessee-company had done no business; it dosed it down and gave its factory on leave and licence basis to J. K. Jute Mills. Since the aforesaid agreement ended till date, the assessee has not carried on any business. In the accounting period itself, there was no activity by way of business. In view of this setting of facts, both past and future, it is not possible for us to record the finding that the assessee was doing business during the accounting period under consideration or that there was lull in its business. In our opinion, it is a clear cut case of the cessation of business. Therefore, it is not possible for us to accept the assessee'....

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....ayments on account of law charges aggregate to Rs. 38,857. There is hardly any expenditure as above which may be directly relatable to the dividend income earned by the assessee. Expenses indirectly relatable to it, viz., to keep its existence as company have been estimated by the learned Commissioner of Income-tax (Appeals) at P.s. 10,000 and have already been allowed. It has not been shown to us as to how this estimate is inadequate and as to how further expenditure should be allowed to keep the company alive as company. The various expenses are directly relatable with the up keep of the factory premises. The assessee ha not let it out on lease and, therefore, there was no occasion to allow the said expenses against such income. To regard....