M/S.hemkiran Packaging (P) Ltd v. The Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX REFERENCE NO.73 OF 1991 M/s.Hemkiran Packaging (P) Ltd. Vs. The Commissioner of Income Tax ..Applicant ..Respondent Ms.Aasifa Khan i/b.K.B.Bhujle for the Applicant.Mr.Vimal Gupta for the Respondent. CORAM :- DR.S.RADHAKRISHNAN &S.J.KATHAWALLA, JJ. DATE : 2ND SEPTEMBER, 2008 P.C. 1.Heard the learned Counsel for the parties. The Tribunal has referred to this Court the following substantial question of law for our opinion: construed as a business expense for carrying on the business at Kandla. the above issue by way of a Reference to this Court. carried-on on a small scale. Ms.Aasifa Khan alsosubmitted that in the year 1979 a business was set upat Kandla and trial production was started but actualcommercial production had started in the month ofMarch 1980. Under these circumstances, it was soughtto be contended that there was no discontinuance ofbusiness and the same was continued. In view thereof,she submitted that the expenditure of payment oftermination dues ought to be treated as a businessexpenditure, as the business was never closed down.6.Mr.Vimal Gupta, the learned Counsel appearingon behalf of the Revenue strongly contended that thevery question which is referred to this Court by theTribunal, itself indicates that the amount was paid byway of termination dues, which obviously means thatthe aforesaid sum was paid when the business at BombayUnit was completely closed down and the labourservices were terminated. Mr.Gupta also pointed outthat the learned Counsel for the Applicant could notshow that right from December,1979 onwards even atKandla the very same business was carrying on by theAssessee. Admittedly, even according to the Assessee, the commercial production at Kandla Unit was started only in the month of April, 1980. Bombay and the very same business appears to havestarted in April,1980, the aforesaid payment ofRs.1,14,693/-, which was paid as termination dues tothe employees can never be considered as a revenueexpenditure. Under the aforesaid facts andcircumstances of the case, we answer the aforesaid question in the negative and against the Assessee and in favour of the Revenue. (S.J.KATHAWALLA,J.) (DR.S.RADHAKRISHNAN,J.)