Business income computation
CHYTHANYA K.K., B.Com, FCA, LLB
Raghuraman & Chythanya
Advocates
#32, 1st Floor,
Patalamma Temple Street, Basavanagudi,
Bangalore, Karnataka, India.
Chythanya K.K., Advocate
1
Critical aspects of business income computation
Chythanya K.K., Advocate
2
GENERAL PARAMETERS

“Profits” to be understood in its
commercial sense –Calcutta Company
Ltd. v. CIT [1959] 37 ITR 1 SC;

For
determining
the
question
of
taxability, well settled legal principles as
well as principles of accountancy to be
taken into account – CIT v. U.P. State
Industrial
Development
Corporation
[1997] 225 ITR 703 SC;

The term “Profits” in various Sections of
Income-Tax Act do not have the same
meaning : It could be assessable profits
under some context or commercial
profits in other contexts – CIT v. Orient
Paper Mills [1983] 139 Chythanya
ITR 763
SC;
K.K., Advocate
3
Deduction under section 28 itself

Real Income Theory – Loss due to
deduction of damages from current bills
against supplies is allowable - CIT v.
Carbon Industries Pvt. Ltd. [2004] 134
Taxman 368 [Mad.];

A claim for deduction for which there is no
specific provision would be admissible
under Section 28 itself – CIT v. Mahsana
District Co-Operative Mils Products Union
Ltd. [2005] 146 Taxman 355 [Guj.];

Certain business losses which may not
come under Section 37 may be allowed
on ordinary commercial principle – State
Bank of Saurashtra v. DCIT
[2005] 93 ITD
Chythanya K.K., Advocate
662 [Ahd.]
4
MEANING OF TRADING RECEIPTS

Whatever tax collected constitutes
trading receipt - Chowringhee Sales
Bureau Pvt. Ltd. v. CIT [1973] 87 ITR
542 SC;

Payment from Public Fund to assist
assessee in carrying his trade, is
revenue receipt – Sahaney Steel &
Press Works Ltd. v. CIT [1997] 228 ITR
253 SC;

The word Income should be the same
as that of word occurring in the
Legislative list and that it is of widest
amplitude and must be given natural
Chythanya K.K.,-Advocate
and grammatical meaning
CIT V
5
ONE OFF TRANSACTION

Even a single transaction could be termed
as business
- CIT v. S.P. Balasubramaniam [2002]
120 Taxman 491 [Mad.]; 250 ITR 127
- CIT v. Sutlej Cotton Mills Supply
Agency Ltd. [1975] 100 ITR 706 SC;

Contra
-
Indian Hume Pipe Company Ltd. v. CIT
[1992] 195 ITR 386 [Bom.];
CIT v. Sashikumar Aggarwal [1992] 195
ITR 767 (All.)
-
Chythanya K.K., Advocate
6
INTEREST – BUSINESS OR OTHER
SOURCES

Short Term Deployment Trade Surplus is Business Income –
- A.P.Industrial Infrastructure Corp Ltd. v. CIT [1989]175 ITR
361 [A.P.];
- CIT v. TN Diary Development Corp Ltd. [1995] 216 ITR 535
[Mad];
- CIT v. Choudhury & Sons [1993] 203 ITR 881 [SC];

Contrary – Murali Investment Company v. CIT [1987] 167 ITR
368 [Raj.;

Preconstruction period Interest;
-
-
Assessable under other head as per Tuticorn Alkali
Chemicals & Fertilisers Ltd. v. CIT [1997] 227 ITR 172
SC;
Advocate
Not Assessable but Chythanya
to beK.K.,reduced
from capital cost as7 per
RENTAL - BUSINESS OR OTHER SOURCES

Rental to be assessed only as house
property income - East India Housing and
Land Dev Trust Ltd. V. CIT [1961] 42 ITR
49 SC

Where assessee gives certain quarters
on rent to his employees and charges
rent, rental income to be treated as
business income - CIT v Delhi Cloth &
General Mills Co. Ltd [1966] 59 ITR 152
[Punj.]

Where premises are given for locating a
branch of bank, police station, excise
office, etc., to run business of assessee
more efficiently, rentals to be taxable as
business income - CIT
National
Chythanyav
K.K., Advocate
8
BROAD PRINCIPLES
-





East India Housing and Land Dev Trust Ltd. V. CIT [1961] 42
ITR 49 SC
Sultan Brothers Pvt. V CIT [1964] 51 ITR 353 (SC)
No precise test can be laid down
It is a mixed question of law & fact and should be determined
from point of view of a businessman in that business on facts
& circumstances of each case, including true interpretation of
the agreement under which the assets are let out.
Where all assets of business are let out, the period for which
the assets are let out is a relevant factor
If only a few assets are let out temporarily as assessee carries
on his other business activities, it is a case of exploiting
business assets;
But if the business never started or has started but ceased with
no intention to be resumed, assets also will cease to be
business assets and the transaction
Chythanya K.K., Advocate will only be exploitation9 of
ONE BUSINESS OR SEVERAL BUSINESSES

Several activities constitute
one business if there is Unity
of Control & Management &
Interlacing of Funds –
- Jayashri Tea & Industrial
Ltd. v. CIT [2005] 272
ITR 193 [Cal.];
- BR Ltd. 113 ITR 647 SC
Chythanya K.K., Advocate
10
Computation under other head – business
character not lost

The breaking up of business income
under different heads for computation
purpose does not render income to be
non-business
-
CIT v. Chugandas & Co. [1965] 55 ITR 17
SC;
CIT v. Cocanada Radha Swamy Bank Ltd.
[1965] 57 ITR 306 SC;
Brooke Bond & Co. Ltd. v. CIT [1986]
162 ITR 373 SC;
DCIT v. Jindal Aluminum [2003] 87 ITD
598 [Bang.];
Apollo Tyres Ltd. v. CIT [2002] 255 ITR
Chythanya K.K., Advocate
273 SC
-
11
BUSINESS PERQUISITES

Car received by a dealer as a gift is a
trading receipt –Boeing v. CIT [2002]
122 Taxman 49 [Mad.];

Unexpected benefits received do not
come under Section 28 [iv] – Mahindra
& Mahindra Ltd. v. CIT [2003] 261 ITR
501 (Bom)
Chythanya K.K., Advocate
12
SETTING UP OF BUSINESS

Difference
between
setting
up
and
commencement
CIT
v.
Coromandal
Fertilizers Ltd., 2003 261 ITR 408 AP & Hotel
Alankar v CIT (1982) 133 ITR 866 (GUJ)
-
When a business is established and is ready
to commence business it can be said of that
business that it is set up
-
The words ‘ready to commence’ would not
necessarily mean that all the integrated
activities are fully carried out and/or wholly
completed so that the business can be
commenced

Previous year begins when business is set up
- Western India Vegetable Products Ltd. V.
CIT [1954] 26 ITR 151 Bby
Chythanya K.K., Advocate
13
SETTING UP OF BUSINESS

Placing P.O.s or receiving P.O.s could mean setting up - CIT v
Stones & Minerals Associate Ltd (2002) 257 ITR 479

When trial production takes place, business is set up - CIT v.
Kanoria General Dealers P.Ltd [1986] 159 ITR 524 Cal.

Negotiation for obtaining and for acquiring a land is a part of
business expenses and if advance was made for this purpose,
business is set up - CIT V.CHEMCROWN (IND) LTD. (2003)262
ITR 177 (Cal.)

Where business consists of different categories, business is
set up from the date when one of the categories of the
business is started and it is not necessary that all the
categories of the business must start either simultaneously or
that the last stage must start before it can be said that the
business was set up - Prem
Conductors [P] Ltd. [108 ITR 654]
14
Chythanya K.K., Advocate
Rent, repairs & rates

Entire mill to be treated as one single
plant and machines only a part of it
and no new assets created in process
of replacement of worn out machines
CIT v. JANAKIRAM MILLS LTD.
(2005) 275 ITR 403 (MAD)

Municipal tax is a recurring liability
whereas building tax under the Kerala
Building-tax Act, 1975 is a one time
liability, which is entirely different CIT
v. HOTEL SHAH & CO [2005] 146
TAXMAN 86 (KER)
Chythanya K.K., Advocate
15
Some special cases

Expenditure incurred in keeping in existence
corporate entity and to comply with statutory
obligations under various statutes even while
there was no business activity in the relevant
year is incidental to business activity as per
Gojer Bros (P) Ltd. v. ITO (2005) 142 Taxman
39 (Kol)

Contra : INTERNATIONAL MARKETING LTD
(IN FAVOUR OF REVENUE) vs. INCOME-TAX
OFFICER (2007) 159 TAXMAN 24 (DELHI)
Chythanya K.K., Advocate
16
DEPRECIATION

Meaning : Mysore Minerals Ltd. V. CIT (1999)
239 ITR 775 SC

Depreciation allowance is mandatory

Where Sec 144 assessment is made taking Net
profit %, the Depreciation should be allowed Circular Dt 31.08.1965

Where income is assessed at 8% Gross profit
rate, Depreciation should be allowed - CIT v
Sriram & Co (2002) 120 Taxman 238 (Raj) &
CIT v Amritlal Khatri (2002) 123 Taxman 457,
CIT v. Jain Construction Co. 245 ITR 527
Chythanya K.K., Advocate
17
DEPRECIATION

A partner can claim depreciation on his assets
used by firm from his share of salary and
remuneration (if he has retained ownership
over the assets) - CIT v Ramlubhaya R
Malhotra (2002) 254 ITR 165 (Guj)

In the case of land and building, the splitting
has to be made both u\s 32 and u\s 45 as held
in the following cases:
- CIT v Vimal Chand Golecha (1993) 201 ITR
442 (Rajasthan)
- CIT v Dr.D.L.Ramachandra Rao (1999) 236 ITR
87 (Madras)
- CIT v T C Itty Xpe (2001) 119 Taxman 137
Chythanya K.K., Advocate
(Madras)
18
DEPRECIATION - USE
- “Use” means ‘kept ready for use’ and not the actual
use - Capital Bus Service (P) Ltd v CIT (1980) 123
ITR 404(Delhi)
- The word “used” should be understood in a wide
sense, so as to include passive as well as active user
- CIT v. Viswanath Bhaskar Sathe (1937) 5 ITR 621
(Bby)
- User of machinery in test production was user for the
purposes of the assessee’s business - Ramakrishna
and Sons Ltd. v. CIT (1984) 149 ITR 554 (Mad.)
- ‘Use’ is sufficient not degree or extent of use - CIT v
Union Carbide (I) Ltd (2002) 124 Taxman 859 (Cal)
- Contra
:
DCIT
v
YELLAMMA
DASAPPA
HOSPITAL,BANGALORE 2007
(62)
Chythanya K.K.,
Advocate KAR.L.J.42 (HC)
19
DEPRECIATION - USE
- Where assessee bought cars on last day of
accounting year and had not registered same for
being brought on roads and there being no evidence
of assessee having used said cars before end of
accounting year, it was not entitled to depreciation in
respect of those vehicles CIT v. MAPS TOURS AND
TRAVELS (2004) 141 TAXMAN 38 (Madras)
Chythanya K.K., Advocate
20
DEPRECIATION- MOTOR VEHICLE

The MV Act does not lay-down that a person
cannot be the owner of a motor vehicle unless
the motor vehicle is registered in his name K.L. Johar and Co. v. Deputy CTO [1965] 16
STC 213 [SC]

Motor vehicle is a movable property, transfer
of ownership is governed by the Sale of Goods
Act and it takes effect from the date of sale.
Registration is not necessary to pass title in
motor vehicle, to claim depreciation under the
Income-tax Act. - CIT v. Nidish Transport
Corporation [1990] 185 ITR 669 [Ker]

Vehicle registered in partner’s name, firm is
entitled to depreciation if funded by firm and
used by firm - CIT v Mohd.
Bux Shokat Ali
Chythanya K.K., Advocate
(2002) 256 ITR 356 (Raj)
21
DEPRECIATION- MOTOR VEHICLE



-
Motor car registered in the name of a director is
entitled to depreciation in the hands of the company Chhabria Textile Mills Pvt Ltd. v. ACIT ITAT Mumbai ‘E’
Bench 2004-05 38 BCAJ 579
Car includes jeeps - Crompton Engg. Co (Madras) Ltd
v CIT (1992) 193 ITR 483 (Mad.) & Southern Roadway
Ltd v CWT (2002) 122 Taxman 128 (Mad)
Depreciation of car – Lease or hire
CIT v Madan & Co (2002) 254 ITR 445 (Mad.)
CIT v. SOUTH INDIA VISCOSE(2005)272 ITR 115
(MADRAS)
CIT v. Kotak Mahindra Finance Ltd (2003) 130 Taxman
130 Bby
Circular No.2 of 2001, dated February 9, 2001
ABB Ltd v. Industrial Finance Corpn. of India (2005)
56 SCL 21 [154 Taxman 512]
Chythanya K.K., Advocate
22
DEPRECIATION- COMPUTER

Colour xerox machine run with help of
computer & printer and scanner are integral
part of computer system – colour xerox
machine to be treated as computer & entitled
to higher rate of depreciation - ITO v.
SAMIRAN MAJUMDAR [2005] 280 OF ITR
[A.T.] 74 [KOLKATA]
Chythanya K.K., Advocate
23
UNABSORBED DEPRECIATION

Unabsorbed depreciation carried forward from earlier
years can be allowed to be set off against income
assessed under other heads as held - CIT v Virmani
Industries (P) ltd (1995) 216 ITR 607 (SC) & CIT v
Jaipuria China Clay Mines (P) Ltd (1996) 59 ITR 555
(SC)

Legal fiction envisaged under section 32(2) for
deeming the unabsorbed depreciation as a part of the
current year’s depreciation is only to achieve the
limited purpose of carry forward & adjustment of the
same against other heads of income, in the absence
of which, the aforesaid set off against other incomes
would not have been available - CIT v. Mother India
Refrigeration Industries (P) Ltd. [1985] 155 ITR 711
SC
Chythanya K.K., Advocate
24
Interest deduction
- Capital u/s 36(1)(iii) means “money” and not any
other asset as held by the Supreme court in the case
of Bombay Steam Navigation Co.(1953) Pvt Ltd
(1965) 56 ITR 52.
- Unless nexus is proved between loan taken and loan
given, interest cannot be disallowed : British Paints
(India) Ltd v CIT (1991) 190 ITR 196 (Cal)
- The case where loan is advanced to a subsidiary
stands on a different footing than advance made to a
sister-concern. In the latter situation, interest can be
disallowed, but not in the case where advances are
made to a subsidiary company for purposes of
business : DCIT v. INDIAN HOTELS CO.LTD. (2005)
92 ITD 97 (Mum.)
K.K., Advocate
- S.A.BUILDERS LTD vs. CITChythanya
(APP)
(2007) 288 ITR 1
25
Interest on capital borrowed for
acquisition of an asset
- Proviso to section 36(1)(iii) wef 01.04.2004 inserted
by Finance Act 2005
- Explanation 8 to section 43(1) inserted by Finance
Act 1986 wef 01.04.1974 and Challapalli Sugar Mills
Ltd. V. CIT (1975) 98 ITR 167 SC
- JCT LTD v. DEPUTY COMMISSIONER OF
INCOME-TAX [2005] 144 TAXMAN – TAX
REPORTS 435 [CAL.]
Chythanya K.K., Advocate
26
Bad debts

Section 36(1) (vii) as amended by the
Finance Act, 2001 requires not only debit
to Profit and Loss account but also credit
to the party’s account as per Jubliant
Organosys vs CIT [2004] 265 ITR 421
(All.). SLP dismissed in 266 ITR 108

There is no need to establish that the debt
has become bad and it is sufficient if the
debt is written off as bad in the books DCIT v. Oman International Bank (2006)
100 ITD 285 (Bby SB)
Chythanya K.K., Advocate
27
Section 43B

Contribution to PF and ESI
Whether
section
43B
covers
both
employee contribution and employer
contribution
-
Yes as per Hitech India Pvt. Ltd v. UOI
(1997) 227 ITR 446 AP
-
No as per CIT v. Madras Radiators and
Pressings Ltd., 2003, 129 Taxman 709
Mad.
Chythanya K.K., Advocate
28
Section 43B

Contribution to PF and ESI
Whether amendment to
(omission
of
Second
retrospective?
section 43B
Proviso)
is
- Yes as per
-
CIT v. GEORGE WILLIAMSON (ASSAM)
LTD (2006) 284 ITR 619 (GAUHATI):
No as per CIT
ITR366 (MAD)
vs. SYNERGY FINANCIAL 288
Chythanya K.K., Advocate
29
Section 43B

Whether section 43B overrides section
40A(7) PF and ESI
-
Yes as per Sree Kamakhya Tea Co.(P) Ltd
vs CIT Cal., A.T.E. (P) Ltd.
v.
ACIT
(2004) 84 TTJ 186 (ITAT – Mumbai)
-
No as per George Williamson (Assam) Ltd.
v. CIT[1997]228 ITR 343 Gau. &
COMMONWEALTH TRUST (I.) LTD. (2004)
269 ITR 291
Chythanya K.K., Advocate
30
Section 40A(3)

Constitutional validity upheld in case of Attar Singh
Gurumukh Singh (1991) 191 ITR 667 SC

Validity upheld even after amendment to Rule 6DD
as per Kamath Marbels v ITO and others (2003)
260 ITR 470 (Ker)

Whether section 40A(3) applies to split payments
-
No as per CIT v Aloo Supply Co (1980) 121 ITR
680 (Orissa) & Shree Mahaveer Corporation v ITO
(2002) 258 ITR (AT) 55 (ITAT- Bang)
-
Yes as per Shri Radhika Prakashan v CIT (2002)
123 Taxman 213 (MP)
Chythanya K.K., Advocate
31
General deductions

Mere non making of entry doesn’t deprive assessee
of his right of deduction, so also a mere disputing
of his liability - Sutlej Cotton mills Ltd v CIT
(1979) 116 ITR 1 SC

The expression “wholly and exclusively” used in
section 37(1) does not mean “necessarily” Sasson J.David & Co. P.Ltd. v. CIT (1979) 118 ITR
261 SC

The expression “for the purpose of business” is
wider than the expression “for the purpose of
earning profits” - CIT v. Malayalam Plantations Ltd.
(1964) 53 ITR 140 (SC)
Chythanya K.K., Advocate
32
General deductions

“Spending’ in the sense of ‘paying out or away’, of
money is the primary meaning of ‘expenditure’.
‘Expenditure’ is what is paid out or away and is
something which is gone irretrievably - General
Insurance Corpn. of India v. CIT (1999) 240
ITR139 SC

Benefit to third party is not a criteria - Eastern
Investments Ltd. v. CIT, 20 ITR 1 [SC]

A company cannot as such have personal
expenditure - Sayaji Iron & Engg co v CIT (2002)
121 Taxman 43 [253 ITR 749] (Guj)
Chythanya K.K., Advocate
33
Capital or Revenue

Expenditure incurred by the assessee in acquisition
of an income earning asset is a capital expenditure
and the expenditure incurred in the process of
earning of income was a revenue expenditure Assam Bengal Cement Co. Ltd. v. CIT [1955] 27
ITR 34 SC

Test of enduring benefit may break down - Empire
Jute Co. Ltd., v. CIT [1980] 124 ITR 1 SC

Expenditure should result in creation of an asset in
favour of the assessee - L.H.Sugar Factory and Oil
Mills (P.) ltd v. CIT [1980] 125 ITR 293 SC
Chythanya K.K., Advocate
34
Capital or Revenue

Payment of technical know-how in this age of fast
changing technology is ordinarily understood as
constituting revenue expenditure - Alembic
Chemical Works Co. Ltd. v. CIT [1989] 177 ITR
377 (SC)

Sum paid as royalty may have to be split between
capital and revenue - Jonas Woodhead and Sons
(India) Ltd. v. CIT [1997] 224 ITR 342 (SC)

Incurring a lump sum expenditure in lieu of
revenue expenditure over a long period is also in
the revenue field as per CIT v MADRAS AUTO
SERVICE (P) LTD [1998] 233 ITR 468 (SC)
Chythanya K.K., Advocate
35
Deferred Revenue

Deferred revenue income
-
In a Time share scheme only annual income
may be recognised in T.K.INTERNATIONAL
LTD. v. ASSISTANT COMMISSIONER OF
INCOME-TAX (2004) 91 ITD 481 (Cuttack)

Deferred revenue expenditure
-
The discount on issue of debenture may be
amortized
as per Madras Industrial
Development Corpn. V. CIT (1997) 225 ITR
802 SC
Chythanya K.K., Advocate
36
Crystalisation of contractual
liability

This liability may be claimed in the year to which
the transaction relates provided it can be fairly
ascertained or estimated on agreed and admitted
terms of the contract
-

Calcutta Co. Ltd. v. CIT [1959] 37 ITR 1 SC
Metal Box Co. of India Ltd. v. Their
Workmen [1969] 73 ITR 53 SC
Where, a dispute is raised by the parties, it would
be allowable only on its final outcome of the
dispute either in the year of amicable settlement
by the parties or in the year of final determining of
judicial process as per Swadeshi Cotton & Flour
Mills [P.] Ltd. [1964] 53 ITR 134 [SC]
Chythanya K.K., Advocate
37
Crystalisation of statutory
liability

Statutory liabilities arise according to the
provisions of law and do not depend on
the view which the assessee may take of
its rights.
Therefore, even if, such
liabilities are disputed or contested before
the Courts, deduction in respect thereof
would be allowable as per Kedarnath Jute
Mfg. Co. Ltd.
V.
CIT [1971] 82 ITR
363 (SC)
Chythanya K.K., Advocate
38
Infraction of law

Irrespective of nomenclature, one has to find
out whether it is compensatory or penal in
nature in order to allow compensatory part as
deduction u/s 37(1) : Swadeshi Cotton Mills
Ltd v CIT (1998) 233 ITR 199 SC

Infraction of law is not a normal incidence of
business : Haji Aziz & Abdul Shakoor Bros. v.
CIT [1961] 41 ITR 350 SC

The payment will be deductible only if it is
compensatory and not punitive : Prakash
Cotton Mills P.Ltd v. CIT (1993) 201 ITR 684
(SC)

Bribes cannot be allowed as a business
expenditure. But “mamools” could be so
allowed :CIT v. Coimbatore Salem Transport
(P.) Ltd. [1966] 61Chythanya
ITRK.K.,
480
(Mad).
Advocate
39
Infraction of law

Compounding fine paid and claimed
as
business expenditure by builder for violation of
building norm is not allowable : C.I.T. Mamta
Enterprises [KAR] [2004] 135 Taxman
393 [KAR]
Chythanya K.K., Advocate
40
Interest on tax

Interest on outstanding sales tax is an
allowable expenditure being compensatory in
nature : Lachmandas Mathuradas v CIT (2002)
122 Taxman 828 SC

Interest on delay in payment of sales tax
cannot be disallowed : CIT v. Delhi
Automobiles (2005) 272 ITR 381 (Delhi).

Interest paid to income tax department cannot
be allowed as business expenditure : Bharat
Commerce and Industries Ltd. v CIT (1998)
230 ITR 733 SC
Chythanya K.K., Advocate
41
WARRANTY COSTS

Provision made by
assessee for warranty
claims on the basis of past experience is not a
contingent liability as the liability towards
warranty is certain and had accrued on the
date of sale, therefore, is allowable as a
deduction
-
Wipro GE Medical Systems Ltd. v. DCIT
(2003) 81 TTJ 455 (Bang)
CIT v. Beema Mfrs. (P.) Ltd. [2003] 130
Taxman 400 (Mad.)
Maruti Udyog Ltd. V. Deputy Commissioner
of Income-tax (2005) 142 TAXMAN – TAX
REPORTS 57 (Delhi)
Chythanya K.K., Advocate
42
SOFTWARE COSTS

Revenue
-
Media Video Ltd v JCIT (2002) 122 Taxman
Mag 28 (Delhi)
Jt. CIT v. Citicorp Overseas Softwares Ltd.
(2004) 85 TTJ (Mum.) 87
JCIT V.CITICROP OVERSEAS SOFTWARES LTD.
85 TTJ 87 (Mum)
CIT v. K & Co. (2003) 181 CTR (Delhi) 378
Business Information Processing Services v.
Asstt. CIT (2000) 73 ITD 304 (Jp.)
-

Capital
-
CIT v Arawali Construction Co. (P) Ltd (2002)
124 Taxman 146 (Raj)
Maruti Udyog Ltd. V. DCIT (2005) 142 TAXMAN
– TAX REPORTS 57 (Delhi)
-
Chythanya K.K., Advocate
43
CA fees for IT return

Allowable
-
CIT v Birla Cotton Spinning & Weaving (1971)
82 ITR 166.
-
H S Shivakantappa v CAIT (1982) 134 ITR 481
Ker

Not allowable
-
Associated stone Ind (Kotah) Ltd v CIT (2002)
123 Taxman 643 (Raj)
Chythanya K.K., Advocate
44
Foreign travel – Director’s wife

Allowable
-
CIT v Appollo Tyres Ltd (1999) 237 ITR 706
-
D.B.Madan v CIT (2003) 261 ITR 193 (Mad.)

Not allowable
-
Ram Bahadur Thakur Ltd v CIT (2002) 257 ITR
289 Ker
Chythanya K.K., Advocate
45
Partners’ life insurance premium
 Allowable
- ITO v. Thakur Vaidyanath Aiyer & Co.
(1984) 7 ITD 9 (Bby)
- Clarification by the LIC vide its
ACTL/1729/4,dated July 24,2000
 Not allowable
- CIT v. Khodidas Motiram
(1986) 161 ITR 99 (Guj)
Chythanya K.K., Advocate
Panchal
46
CONCLUSION
Business income computation is a
complex
exercise
thanks
to
ambiguities
in
relevant
tax
provisions
This head of income contributes
maximum litigation
This paper seeks to bring out some
critical aspects which may not be
taken as exhaustive
Chythanya K.K., Advocate
47
CHYTHANYA K.K, B Com, FCA, LLB
Partner , Raghuraman & Chythanya,
Advocates.
Thank You
Email id : Chyti@vsnl.net
Chythanya K.K., Advocate
48