Punjab-Haryana High Court
Commissioner Of Income-Tax vs Dharam Pal Shanti Sarup on 21 November, 1977
JUDGMENT
1. The respondents paid a sum of Rs. 40,000 to the heirs of the deceased partner. Out of this amount, Rs. 32,500 were paid on account of goodwill The Tribunal has held that this expenditure incurred was in the nature of revenue expense. The Commissioner of Income-tax has come up with a prayer that we should direct the Tribunal to state the case for bur decision The learned counsel for the respondents has placed reliance upon Devidas Vithaldas & Co. v. Commissioner of Income-tax [1972] 84 ITR 277 (SC) for the proposition that such an expense has been rightly regarded as revenue expense.
2. We are not concerned with the final outcome of this case. Whether this expenditure should be regarded as capital expense or revenue expense it does raise a question of law. We accordingly allow this petition and direct the Tribunal to state the case for our decision on the following question:
"Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the sum of Rs. 32,500 is allowable as revenue expenditure ?"
3. No costs.