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TMI Blog1978 (7) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case, the Tribunal is right in holding that the amount of Rs. 66,194 incurred in connection with the litigation before the Allahabad High Court is not an allowable deduction or an outgoing ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in not allowing Rs. 2,04,273 in respect of the cane purchase price? (4) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in not allowing Rs. 32,004 in respect of Molasses Fund Quarters?" In respect of the first question, the position is that the company paid a sum of Rs. 11,069 to lawyers in connection with the amalgamation of the Raza Sugar Company with the Buland Sugar Co. Ltd., Rampur. Afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration of dividends. In January, 1957, the matter was compromised. One of the terms of the compromise was that the petitioners would refrain from challenging the declaration of the dividends provided they are paid expenses of litigation. They came to Rs. 66,194 which the assessee-company paid. It is clear that neither of the two companies was a party to the litigation. The litigation commenced long prior to the coming into existence of the present company, namely, Raza Buland Sugar Co. Ltd. The litigation was between the managing agents and directors on the one hand and the shareholders on the other. The company was not directly concerned or interested. The litigation was not incidental to the carrying on of the business by the assessee. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1962. We, however, are unable to agree with the Tribunal. It is true that the company made provision for the entire amount of Rs. 2 lakhs and odd. It is not disputed that the Govt. fixes the price of cane purchased by sugar factories under the Sugarcane Control Orders. According to that price, the company had to pay a price of Rs. 1,47,38,577. It, however, retained a sum of Rs. 2,04,273 by way of provision for the low recovery of sugar from the cane purchased from Tarai area and it was entitled to rebate which it estimated at the rate of 2 annas per maund. Subsequently, it transpired that it was entitled to retain by way of rebate a sum at the rate of anna one per maund only. The balance was actually paid. The liability of the assessee- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be leased out to the factory owners on the agreed terms and conditions. Forty quarters were built under this scheme. The assessee gave out some land. It also paid a sum of Rs. 32,004 towards the cost of construction of the quarters. The assessee claimed that it had no title to the quarters. The expenditure was revenue in nature and was allowable as such. The Tribunal repelled this plea. It held that there was no getting away from the fact that the assessee-company derived an advantage of an enduring character in that it secured forty workmen's quarters for exclusive user by its workers for an unlimited period of time. The circumstance that the assessee was compelled to agree to the scheme was irrelevant in so far as the nature of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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