Supreme Court Of India
Shree Meenakshi Mills Ltd., Madurai
Vs.
Commissioner Of Income-Tax, Madras
Date Of Judgment: 19/09/1966
Bench: J.C. Shah, Vishishtha Bhargava
Citation: 1967 Air 444, 1967 Scr (1) 392
ACT: Income-tax Act, 1922 (11 of 1922), s. 10(2)(xv)-Expenditure incurred for proceedings to prevent enforcement of order interfering with business-It admissible deduction.
HEADNOTE: The assessee-mill claimed deduction under s. 10(2) (xv) of the Indian Income-tax Act of the expenses incurred by it and the costs awarded to Government in respect of unsuccessful writ petition and appeals herefrom.The deduction was disallowed by the departmental authorities, and the question was answered against the assessee by the High Court. In appeals to this Court.
HELD: The appeal must be allowed.
The proceeding started by the assessee was in relation to the business of the assessee.
Expenditure incurred to resist in a civil proceeding the enforcement of a measure-legislative or executive, which imposes restrictions on the carrying on of a business or to obtain a declaration that the measure is invalid would. if other conditions are satisfied, be admissible under s. 10(2) (xv) as a permissible deduction in the computation of taxable income, even though the expenditure does not directly relate to the earning of income. Expenditure may not be denied admission as a permissible deduction in computing the taxable income merely because the proceeding has failed. Persistence of the assessee in launching the proceeding and carrying it from Court to Court and incurring expenditure for that purpose again cannot be a ground for disallowing the claim. (396 B-C; 399 B) Commissioner of Income-tax, West Bengal v. H. Hirjee 23 I.T.R- 427, Morgan (Inspector of Taxes) v. Tate & Lyle Ltd. 26 I.T.R. 195 : 35 T.C. 367 and Commissioner of Income-tax, Kerala v. Malayalam Plantations Ltd., (196 HI 7 S.C.R. 693, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 557 & 558 of 1965, Appeal by special leave from the judgment and order dated September 19, 1962 of the High Court of Judicature at Madras (in Tax Case No. 87 of 1960).
R. Ganapathy lyer, for the appellant.
