1987 (10) TMI 87

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....arned CIT (AP)-VII, Calcutta, for the asst. yr. 1980-81. 2. The assessee has challenged the above order on the following grounds that: "(1) The company being in voluntary liquidation has no income within the scope of s. 5 of the IT Act, 1961 liable to be assessed to income-tax. (2) No rate of tax has been fixed by the Finance Act, 1980 for a company in liquidation which is neither a compa....

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....Setty (1981) 21 CTR (SC) 138 : (1981) 128 ITR 294 (SC) becomes operative. (7) In any event, the gross amount off tax including surcharge payable works out to Rs. 5,002 as per provisions of the Finance Act, 1980 instead of Rs. 6,114 determined by the ITO. 3. In fairness, the learned Authorised Representative for the assessee conceded that as far as the first three grounds are concerned, they ....

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.... to the provisions of s. 520 of the Companies Act, 1956, and particularly those expenses relating to salary and wages and rent. 6. The learned Departmental Representative supported the order of the CIT(A) rejecting this ground on his reasoning that the ITO has a legal authority to consider each item of expenditure in the order of assessment keeping in view the provisions of s. 57(iii) of the IT....

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....annot, however, be presumed that all the costs and the expenses are legally deductible under s. 57 of the IT Act. At the same time, a company in liquidation has to maintain its existence as a company in liquidation and for that purpose it has to incur certain expenses on establishment and other necessary expenses to maintain such establishment. The items of expenditure pressed in full by the asses....