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TMI Blog1977 (8) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... se, whether the Tribunal was right in holding that the applicant's occupation was illegal? 3. On the facts and in the circumstances of the case, was the Tribunal justified in disallowing the interest ? " Prabhat Theatres Private Ltd., the assessee, carries on business of exhibiting motion pictures in a theatre called " Kibe Theatres ". It is the case of the assessee that for the assessment year 1959-60, for which the relevant previous year was the calendar year 1958, the assessee-company was entitled to claim as a deduction an amount of interest of Rs. 34,080 paid by it to the owner of Kibe Theatres, viz., R.M. Kibe. Two partnership firms, viz., Prabhat Film Co. and Famous Pictures, joined in partnership with the object of carrying on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TO disallowed the assessee's claim holding that the alleged expenditure was in the nature of capital expenditure. According to him, the assessee-company agreed to compromise and payment of rent and interest because it was in illegal occupation of the property and it would have been required to vacate the premises in the event of its disputing the compromise. In effect, by the consent decree, the assessee has simply managed to legalise the occupation of the building and the payment of interest is, therefore, in the nature of penalty for infraction of tenancy regulations or in the nature of payments for securing tenancy rights. In an appeal by the assessee the AAC allowed the claim for deduction to the extent of Rs. 5,400. It was contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the leases that were executed from time to time was filed. Only the consent decree in Civil Suit No. 1758 of 1955 was filed and in accordance with the normal practice of the mofussil courts such a consent decree contained a substantial portion of the plaint. However, plaints in the other suits were not filed nor were the written statements in any of the other suits filed. It was only one suit that resulted in a compromise in respect of which the compromise decree above referred to was arrived at. The counsel who appeared on behalf of the assessee before the Tribunal informed the Tribunal that one suit was dismissed. The counsel was unable to state before the Tribunal how and when the occupation of the theatre by the assessee commenced. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee pursuant to the order of the High Court. So far as the first two questions are concerned, they can be disposed of very shortly. There is no finding given by the Tribunal to the effect that the sub-letting in favour of the assessee-company was in contravention of the provisions of s. 15 of the Rent Act. In fact, it has been careful enough to point out in its order that no sufficient material was on record and that a plea as regards s. 15 had to be considered because it was urged by the counsel on behalf of the assessee before the Tribunal. Strictly speaking, neither of the two questions would arise from the order of the Tribunal. So far as question No. 3 is concerned, the Tribunal has been careful enough to point out that there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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