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TMI Blog1965 (5) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... several shares of the New Tea Co. Ltd. (hereinafter referred to as the Tea Co.), the face value of which at the material time amounted to ₹ 7,480. One Sudhangsu Mohan Choudhury, a shareholder of the Tea Co, instituted a suit against the respondent-company and some other defendants in the Calcutta High Court alleging that the shareholding of the assessee in the Tea Co., being in excess of 10 per cent. of the subscribed share capital of the Tea Co., contravened the provisions of section 27A(4) of the Insurance Act, 1938. The plaintiff in the suit prayed, inter alia, for a perpetual injunction restraining the defendants from exercising any votes or any rights in respect of the shares or any rights in respect of the shares held by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to hold that the said expenditure was of a capital nature and, as such, cannot be allowed as a valid deduction from the gross income of the assessee inasmuch as the suit had really been instituted in respect of controlling the management of the Tea Co. and the expenses incurred cannot be said to be incidental to the assessee's life insurance and other business. He has drawn our attention to page 27 of the paper-book, where Mr. Justice Sarkar in his judgment has stated: The substance of the dispute, however, is who should control New Tea, i.e., whether the group controlling Hindusthan, who are the controlling defendants, or the group siding with the plaintiff. If votes can be cast on all the shares held by Hindusthan, the group supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of this case. The Income-tax Tribunal in its order has come to the following conclusions: (a) We think the Appellate Assistant Commissioner is not quite correct in view of the fact that the investments were not in jeopardy. (b) The suit was therefore defended by the insurance company not only to maintain and retain their existing voting powers but also to protect the investments. (c) In the present case, as already observed, the expenses of litigation were incurred to maintain and protect investments as well as voting rights of the insurance company which is a valuable right; no new asset was however acquired as a result of such expenditure. It was not therefore an expenditure of a capital nature. It seems to us th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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