1976 (7) TMI 3

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....sessee wholly for the purposes of its business and allowable as a deduction under section 37 of the Income-tax Act, 1961 ? " The assessee is a firm carrying on the business of running a hotel. That hotel business was previously run by one Seetharama Rao and subsequently it was converted into a partnership. We are concerned in this reference with the assessment year 1965-66, the relevant previous year ending on 31st March, 1965. The expenditure which is now in dispute has been described as follows : Rs. 8,990 Putting decorated mirrors with pictures of religious personages in the pink hall of the hotel used as dining cum-lecture hall. 14,300 Putting up plaster-moulded roof decoration in the above hall with a view to beaut....

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....as come up with this reference raising the question mentioned above. Section 37 of the Income-tax Act, 1961, provides for the deduction, of any expenditure not being in the nature of capital expenditure laid out or expended wholly and exclusively for the purposes of the business or profession. The only question, therefore, is whether this expenditure is of capital nature or whether it is laid out wholly and exclusively for the purposes of the assessee's business. As far as the latter aspect is concerned viz., as to whether it is an expenditure laid out wholly and exclusively for the purposes of the business, there is absolutely no dispute that it has been incurred, in the present case, only for the purposes of the assessee's business. We....