9911796707
TMI Blog1985 (8) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... ered firm running a famous tutorial college, for the past several years in a vast building an land in Halls Road, Rigmore, Madras, The tenancy of the property was obtained on a nominal monthly rent of Rs. 375 by Shri A. M. Parasuram, who carried on the business as a proprietary concern. Later on the business was converted into a partnership business consisting of Shri Parasuram and otheRs. The rent of the property is being paid by the firm through partner Shri Parasuram. The owners of the property filed petition under ss. 4 and 5(3) of the Tamil Nadu Buildings (Lease and Rent) Control Act, 18 of 1960 in the Court of Small Cases at Madras for enhancement of rent to Rs. 9,000 per month. The suit was resisted by partner Parasuram and defended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mises for nearly 40 years by paying a nominal rent of Rs. 375 per month. The suit for fixation of fair rent as well as eviction filed by the owners of the premises would affect the vital interest of the business carried on by the assessee in the aforesaid premises and therefore the suit was defended and the expenditre was incurred in order to protect against financial hardship and continuation of business without any let or hindrance. Therefore, the assessee was directly interested in the suit matter and the legal expenses were fingered wholly and exclusively for the purpose of business. He further submitted that the rent paid by the firm all along was being allowed as deduction and by incurring legal expenses no capital asset was acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the suit would have jeopardised the carrying on the business in a vast building extending 6.75 grounds and land of 32.8 grounds, which were ideal for the tutorial college run by the assessee. The fair rent sought by the owners was not likes than Rs. 9,000 per month. It could be will imagined that if the suit was decided in favour of the owners the assessee s business would have been jeopardised and adversely affected the income. Therefore, the legal expenses were incurred by the assessee on behalf of the partner in order to preserve the income and the business carried on by the assessee in the aforesaid premises. 5. Even according to the Department only Shri Parasuram was tenant and therefore, he was concerned with the litigation and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in Courts where the vires of statute under which the commission was constituted were challenged. It hold that the law charges were expenses incurred for the preservation and protection of the assessee s business in that case for any process or proceedings which might have resulted in the reduction of its income and profits. Even otherwise the expenditure was incidental to the business and was necessitated or justified by commercial expediency. The expenditure which was incurred in opposing a coercive Government action with the object of saving taxation and safeguarding the business was justified by commercial expediency and was therefore allowable under s. 10(2)(xv) of the IT Act, 1922, similar to s. 37(1) of the IT Act, 1961. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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