1966 (9) TMI 17

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..... pany and its officers was a permissible deduction for the purpose of computing the profits and gains of the assessee`s business
Judge(s) : A. B. N. SINHA., H. MAHAPATRA. JUDGMENT This is a reference under section 66(1) of the Indian Income-tax Act, at the instance of the assessee, Messrs. Rohtas Industries Ltd., relating to the assessment year 1953-54 (previous year from 1st of November, 195 .....

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..... ollowing question to be considered by this court : "Whether, in the facts and circumstances of the case, the sum of Rs. 5,859 incurred in defending the criminal proceedings against the company and its officers was a permissible deduction for the purpose of computing the profits and gains of the assessee's business ?" The main basis of disallowing the claim of the assessee by the revenue authorit .....

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..... Act. There, it was disallowed on the ground that the primary purpose, for which the legal expenses were incurred, was to save the accused from conviction and punishment and not for any purpose connected with the business. Their Lordships of the Supreme Court laid down that, "the deductibility of such expenses under section 10(2)(xv) must depend on the nature and purpose of the legal proceeding in .....

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..... he expenditure in that criminal case was not the protection of the quality of their manufactured goods from the assailment charge against them. Therefore, the expenses incurred will be deductible under section 10(2)(xv) of the Act. The question is thus answered in the affirmative and in favour of the assessee. But, in the circumstances of the case, there shall be no order for costs, Question ans .....

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