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1 - 10 of 20 (0.20 seconds)Indian Companies Act, 1913
Premier Construction Co. Ltd. vs Commissioner Of Income-Tax, Bombay on 23 February, 1966
(c) Premier Construction Co. Ltd. v. CIT [1966] 62 ITR 176 (Bom). In this case, a shareholder who was shut out from raising certain queries at the annual general meeting of the assessee, a public limited company, filed a suit against the assessee and its board claiming, inter alia, a declaration that the ruling given by the president at the general meeting was illegal and invalid and that the subsequent resolutions passed at the said meeting were also invalid. A consequential relief of injunction restraining the assessee and its board from giving effect to or acting in accordance with the said resolutions were also claimed. The court granted only a declaration that the ruling given by the president at the annual general meeting was illegal and the costs of the suit. The appeal of the assessee and its board against the said decree was dismissed with costs. The costs of the assessee in the said litigation was claimed as a deduction in the relevant assessment year. On a reference, the Bombay High Court held on the facts that the expenses incurred by the assessee in defending the suit in the trial court were allowable under Section 10(2) of the Indian I.T. Act, 1922, as the reliefs claimed by the plaintiff if granted would have affected the carrying on of the business of the company. It was held, however, that the appeal was a matter which concerned only the shareholder and the board of the assessee, namely, whether a particular ruling given by the president of the board was legal or not. The expenses of this appeal, therefore, were held as not having been incurred for the carrying on of the business of the assessee. The Bombay High Court observed as follows (p. 181):
Shree Meenakshi Mills Ltd., Madurai vs Commissioner Of Income-Tax, Madras on 19 September, 1966
(d) Sree Meenakshi Mills Ltd. v. CIT . Here the assessee carried on the business of cotton spinning and weaving. An order passed by the Textile Commissioner under the Cloth and Yarn (Control) Order, 1945, whereby the Commissioner seized some yarn delivered by the assessee to weavers outside its factory and directed the assessee to confine delivery of its yarn to the person as specified by the Commissioner was challenged by the assessee in the Madras High Court in an application under Section 45 of the Specific Relief Act praying for an order directing the Commissioner to desist from seizing the yarn supplied and to restore that already seized. The application was dismissed by the trial court. An appeal to the High Court was unsuccessful and a further appeal to the Privy Council was also dismissed with costs which had to be paid to the Government. The expenditure incurred by the assessee was claimed to be deductible as being wholly and exclusively laid out for the purpose of its business. This claim was rejected by the revenue authorities, the Tribunal and by the High Court on a reference. On a further appeal to the Supreme Court, it was, however, held that the object of the litigation initiated by the assessee was to secure a declaration that the order of the Textile Commissioner restricting the right of the assessee to carry on its business was unauthorised and to prevent enforcement of such order so that its business could be carried on without interference. Expenditure incurred in that behalf would, therefore, be expenditure laid out wholly and exclusively for the purpose of the business of the assessee. The Supreme Court in its judgment observed as follows (p. 213):
Commissioner Of Income-Tax, Punjab vs Shiwalik Talkies Ltd. on 1 December, 1965
(e) CIT v. Shiwalik Talkies Ltd. [1967] 63 ITR 83 (Punj). Here, during the pendency of litigation amongst the directors of the assessee, a private limited company, some of its shareholders filed an application in the High Court under Section 153C of the Indian Companies Act, 1913, questioning the appointment of some of the directors. This application was ultimately compromised. The assessee claimed a deduction of a sum of Rs. 531 being expenditure incurred in the said application. On a reference, the Punjab High Court held that the expenditure cannot be considered to be an expenditure laid out or expended wholly or exclusively for the purpose of the business of the company.
Dalmia Jain & Co. Ltd vs Commissioner Of Income-Tax,Bihar & ... on 29 July, 1971
(f) Dalmia Jain and Co. Ltd. v. CIT . In this case, in respect of a quarry, a suit for specific performance of an agreement to grant a lease and in the alternative for damages was filed by one Kalyanpur Lime Co. against the State of Bihar and the assessee as its agent. The assessee was in fact working the quarry in the expectation of a lease in its favour. The suit was tried and dismissed. An appeal to the High Court was also dismissed but on a further appeal to the Supreme Court the suit was decreed against both the defendants for only damages. The assessee claimed deduction of its expenses incurred in such litigation as having been incurred for the purpose of protecting its business. The revenue authorities rejected such claim holding that such expenditure had been incurred for acquiring a new asset. The Tribunal accepted the contentions of the assessee but on a reference the High Court upheld the contention of the revenue. On a further appeal to the Supreme Court, it was held that as the assessee did not initiate the litigation and as in the course of its business it was working the said quarry, it could be reasonably inferred that the assessee resisted the suit to protect its business as was found by the Tribunal and as such entitled to claim deduction of such expenditure.
Mask And Co. vs Commissioner Of Income-Tax, Madras. on 30 March, 1943
(a) Mask & Co. v. CIT [1943] 11 ITR 454 (Mad). In this case, a decree for Rs. 5,000 with costs was passed in a suit for damages for breach of an undertaking given by the assessee, a firm, to co-traders to sell goods at certain specified rates. The assessee claimed deduction of the amount paid under the decree as business expenditure under Section 10(2)(xii) of the Indian I.T. Act, 1922. On a reference, the Madras High Court held that the assessee's action in disregarding the undertaking was palpably dishonest and damages consequentially awarded was not incidental to the assessee's trade and did not constitute a deductible expenditure under the said section:
J.B. Advani And Co. (P.) Ltd. vs R.D. Shah, Commissioner Of Income-Tax, ... on 22 August, 1968
(b) Transport Company Ltd. v. CIT [1957] 31 ITR 259 (Mad). This decision was cited for the following observation in the judgment of the Madras High Court (p. 266) :
A. V. Thomas & Co., Ltd., Alleppey vs The Commissioner Of ... on 25 October, 1962
(c) A. V. Thomas and Co. Ltd. v. CIT [1963] 48 ITR (SC) 67. In this case, the assessee, a company, had made large payments to another private limited company with the intention of acquiring its shares. The Supreme Court held that as the asseessee was neither a banker nor a money-lender such advances could not be said to be incidental to its trading activities and could not be either allowed as business expenditure or written off as a bad debt.
Commissioner Of Income Tax, Bihar & ... vs Maharajadhiraja Sir Kameshwar Singh Of ... on 17 October, 1939
(a) CIT v. Maharajadhiraja Sir Kameshwar Singh of Darbanga [1942] 10 ITR 214 (PC). In this case, certain shareholders of a company instituted a suit against the assessee's father who had lent money to the company in the course of his business alleging breach of agreement by the creditor in failing to furnish necessary finance causing loss to the company. The creditor filed a suit for recovery of the money lent. During the pendency of the suits the creditor died and the assessee was substituted in his place. The suit by the shareholders was ultimately dismissed. The assessee claimed deduction of the expenses incurred in defending the suit in the computation of his income from money-lending business. On these facts, the Privy Council held that the suit was instituted against the creditor primarily in his capacity as a money-lender and the expenditure incurred in defending a false claim was a necessary part of his business of money-lending and deduction was allowable.