ISHWARI KHETAN SUGAR MILLS PRIVATE LTD Vs. COMMISSIONER OF INCOME TAX U P

JUDGEMENT

(1.) THIS is a statement of the case under section 66(1) of the Income-tax Act, 1922 (hereinafter referred to as the Act). The question referred is:

(2.) THE material facts are these: The relevant year of assessment is 1958-59, the previous year being the year ending on the 2nd October, 1957. The assessee is a company which manufactures sugar. In returning a net loss of Rs. 3,61,915 for the relevant assessment year, it deducted an expenditure for stamps and registration charges for entering into an agreement with the Punjab National Bank for obtaining an overdraft. The Income-tax Officer would appear to have accepted that this was in fact an expenditure incurred for stamps, registration charges, etc., in respect of an overdraf agreement with the bank, but he disallowed it on the ground that it was not an expense on the renewal of an agreement but for entering into a new agreement, and, as such, it was capital expenditure in nature. The Appellate Assistant Commissioner agreed with this view and added that the expenditure did not bring into existence a new asset of an enduring nature. On second appeal to the Tribunal, the agreement with the band was not forthcoming and so it proceeded to decide the case on the basis of the facts found by the authorities below and endorsed the view that the expenditure was capital in nature. Hence, this reference by the assessee.

(3.) FOR the reasons given above, we would answer the question referred in the affirmative, and in favour of the assessee. The Commissioner of Income-tax will pay the costs of this reference, which we assess at Rs. 200. Counsel's fee is also assessed at Rs. 200.