Case references

Sl
No.

Matter

Judgment

Case Reference

1.

Loss of money by theft

Allowable expenditure.

National Bank vs. C.I.T.

(1965 ITR P.381)

2.

Depreciation on
leasehold property

If the lessee constructs any building

on the hired or leasehold land,
depreciation is not to be allowed on
such building as the lessee is not the
owner of the property.

C.I.T. (Bombay) Vs.

Associated Cement co. (1970
PTD P.510)

3.

Loss of goods in Transit

Allowable
expenditure
because
business was continued at the time of
incurring loss.

C.I.T. vs. Tulshiram Karam

Chand (1964 ITR P.51)

4.

Expenditure to get rid of

ofences committed by
the assessee

Any amount expended to get rid of

ofences by the assessee will not be
allowable expenditure.

Sree Minakshi Mills ltd. vs.

C.I.T. (1963 ITR)

5.

Penalty paid for violation

of customs Law

Yasin Ltd. (Chittagong) Vs.

C.I.T. (1965 PTD P.126)

6.

Embezzlement of cash
by cashier

Any penalty paid for violation of any

Law of the land is not allowable
expenditure.
To be allowed as trading loss.

7.

Legal expenditure for

retaining legal property
of business

Allowable expenditure.

Liberty Cinema vs. C.I.T.

(1952 ITR P. 153)

8.

Subscription paid to
political party

To be disallowed being not connected

with day to day running of the
business

J. K. Cotton, Spinning and

Weaving Mills ltd vs. C.I.T.
(1967 ITR P.444)

9.

Retirement
Compensation paid to
employees on closure of
business

To be disallowed on the ground that it

is not to earn profit in future.

Moodi Electric Supply co vs.

C.I.T. (1980 ITR P.126)

10.

Interest paid for delayed

payment of income tax

To be disallowed being penal interest

for violation of existing law.

Swadeshi Cloth Dealers Ltd

vs. C.I.T. (1976)

11.

Amount Spent on annual

dinner

Allowable if it is the usual practice of

the company.

Chittagong Warehouse Ltd.

vs. C.I.T. (1984)

12.

Carry forward of
unabsorbed depreciation
where the business is
discontinued.
Compensation paid for
termination of managing
agency

Unabsorbed depreciation can not be

carried forward if the same business is
discontinued.

Saha Rubber (Pvt.) ltd vs.

C.I.T. (Bombay) (1969 PTD
P.35)

It is not allowable expenditure

Lakshmi Narayan Cotton

Mills Ltd vs. C.I.T. (1966 ITR
P.744)

13.

Goutam Chand vs. C.I.T.

(Madras) (1962 ITR P.310)

Sl
No.

Matter

Judgment

Case Reference

14.

Salary of Liftman, Pump

man and Darwan

Allowable expenditure where it is

incidental and essential for drawing
rental income.

Judgment of Taxes Appellate

Tribunal. Dhaka Bench,
Dhaka. (BTD P.79)

15.

Remuneration paid to
Karta of HUF

It is not allowable expenditure

because he is bound to manage his
family.

C.I.T. vs. Jugal Kishor. (1962

ITR P.293)

16.

Remuneration paid to
shareholder directors

As it was stated in A/A of the company

that remuneration will have to pay
only for attending meeting, so any
amount paid otherwise than for
attending meeting is to be disallowed.

Shervani Sugar Syndicate (p)

Ltd vs. C.I.T. (1982 BTD P.34)

17.

Contribution by the
employer to
Unrecognized Provident
Fund

To be disallowed.

(1962 ITR P.910)

18.

Expenditure of
registration of trade
mark

For the 1st year it is allowable

expenditure.

C.I.T. vs. Finlay Mills

(Bombay) 1920 ITR P.312

19.

Expenditure incurred for

acquiring technical
knowledge

Allowable expenditure

C.I.T. vs. the Engineers 1967

PTD P.87

20.

Gratuity paid by the

employer

Allowable if it is usual practice of the

company.

Lakshi Chand Muchand vs.

C.I.T. (1967 PTD P.232)

21.

Illegal expenditure

No illegal exp. (e. g. bribe) is allowable

in a legal business.

C.I.T. (Andra Pradesh) Vs.

Kodandarama & Co. (Andra
Pradesh H/C)
(1983) 144 ITR P.395)

22.

Fee paid to Income Tax

Practitioner

Allowable up to appeal to the Taxes

Appellate Tribunal and thereafter it is
the discretion of the court.

C.I.T. (Chittagong) Vs.

Pakistan National Broker Ltd.
(Chittagong) 1975 B.T.D.
vol 3-P.114

Compiled by:
Ranjan Kumar Bhowmik
FCMA
Additional Commissioner of Taxes

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