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1 - 10 of 16 (0.43 seconds)E. D. Sassoon And Company Ltd vs The Commissioner Of Income-Tax,Bombay ... on 14 May, 1954
Ltd. v. Commissioner of Income-tax, the court observed at page 390 of the report that the above-mentioned case was in respect of expenditure incurred in defending an employee which was admissible and not those incurred in defending the owner.
The Specific Relief Act, 1963
Commissioner Of Income-Tax, Andhra ... vs Dhanrajgiri Raja Narasingirji on 7 March, 1973
In the case of Commissioner of Income-tax v. Dhanrajgirji Raja Narasingirji, , this question came again before the Supreme Court in respect of a criminal prosecution. There the assessee was the managing agent of the public company promoted by him and was also the chairman of its board of directors. In that case the Supreme Court held that the assessee had incurred the expenditure for the purpose of its business. It was for the assessee to decide how best to protect his own interest. It was the duty of the assessee to see that the prosecution was properly conducted. The fact that he did not leave the carriage of the case in the hands of the prosecuting agency of the Government was no ground for disallowing the expenditure. It was not open to the department to prescribe what expenditure the assessee should incur and in what circumstances he should incur that expenditure. It was further observed that the assessee not having challenged the finding of the criminal litigation, the High Court should not sit as a court of appeal and examine the case afresh. The Supreme Court made it clear that it was not correct to say that expenditure incurred in connection with a criminal case could not be deducted as business expenditure under Section 10(2)(xv). That provision did not make any distinction between civil litigation and criminal litigation. It made no difference whether the proceedings were civil or criminal. All that the court had to see was whether the transaction in respect of which proceedings were taken arose out of and was incidental to the assessee's business and whether the expenditure was bona fide incurred wholly and exclusively for the purpose of the business.
Section 6 in The Mines Act, 1952 [Entire Act]
Commissioner Of Income-Tax,West ... vs H. Hirjee on 17 April, 1953
5. The question whether the expenses incurred in litigation--civil or criminal--by the assessee are admissible as deduction has cropped up from time to time and the several authorities of different courts have dealt with this problem from different angles. We may in this connection first refer to the decision of the Supreme Court in the case of Commissioner of Income-tax v. H. Hirjee, . There the assessee, ah individual carrying on business as selling agent of a company, was prosecuted under Section 13 of the Hoarding and Profiteering Ordinance, 1943, on a charge of selling goods at prices higher than were reasonable in contravention of the provisions of Section 6 thereof and a part of his stock was seized and taken away. The prosecution ended in an acquittal and the assessee claimed deduction from the profits of his business under Section 10(2)(xv) of the Indian Income-tax Act, 1922, a certain sum spent in defending the case. The Income-tax Appellate Tribunal found that the expenditure was incurred solely for the purpose of maintaining the assessee's name as a good businessman and also to save his stock from being under-sold if the court held that the prices charged by him were unreasonable. The High Court held that this was of finding of fact and allowed the assessee's claim for deduction. The department appealed to the Supreme Court and the Supreme Court held that the finding of the Tribunal was vitiated by its refusal to consider the possibility of the criminal proceeding terminating in the conviction and imprisonment of the assessee and was not binding on the High Court as a finding of fact; that in the circumstances of the case the sum spent in defending the criminal proceeding was not an expenditure laid out or expended wholly and exclusively for the purpose of the business and it was, therefore, not allowable deduction under Section 10(2)(xv) of the Act. The Supreme Court further observed that the deducibility of such expenses under Section 10(2)(xv) should depend on the nature and purpose of the legal proceeding in relation to the business whose profits were under computation and could not be affected by the final outcome of that proceeding. The Supreme Court also observed that the income-tax assessments had to be made for every year and cannot be held up until the final result of a legal proceeding which might pass through several courts was announced. It has to be borne in mind that this was a case of an individual and he was defending the criminal proceeding against himself. The question was that in defending himself in the criminal proceeding, was he carrying on the business in the usual course or was the expenses incidental to his business. On the evaluation of the facts in that case, the Supreme Court was of the opinion that, as the. Tribunal had refused to consider the possibility of the criminal proceeding terminating in the conviction and imprisonment of the respondent, being the individual assessee therein, the findings of the Tribunal were vitiated and it could not be said that the amount was deductible under Section 10(2)(xv) of the Indian Income-tax Act, 1922. In the case of Haji Aziz and Abdul Shakoor Bros. v. Commissioner of Income-tax, the Supreme Court was concerned with a slightly different aspect of this problem. The assessee in that case had carried on business of importing dates from abroad and sold them in India. The assessee carried the dates from Iraq partly by steamer and partly by country craft at a time when the import of dates by steamer was prohibited and the dates which were imported by steamer were, therefore, confiscated by the customs authorities under Section 167 of the Sea Customs Act, 1878, and item 8 thereto. The assessee was, however, given an option under Section 83 of the Act to pay fine in lieu of confiscation. The assessee paid the fine and got the dates released. In computing its profit, the assessee sought to deduct the amount, paid by it by way of fine, as an allowable expenditure under Section 10(2)(xv) of the Indian Income-tax Act, 1922. It was held by the Supreme Court that the amount paid by the assessee by way of penalty for breach of the law could not be considered to be an expenditure, wholly and exclusively for the purpose of the business. Even though it might involve no personal liability, it could not be said that the amount was paid wholly and exclusively for the purpose of the business of the assessee, within the meaning of Section 10(2)(xv) of the Indian Income-tax Act, 1922, and was as such not an allowable expense under that section. The Supreme Court further held that the expenses which were permitted as deductions were such as were made in order to enable a person to carry on and earn profit in the business. It was not enough that the disbursements were made in the course of or arose out of or were concerned with or made out of the profits of the business but these must also be for the purpose of earning profits of the business. An expenditure was not deductible unless it was a commercial loss in trade and a penalty imposed for breach of the law during the course of trade could not on grounds of public policy be said to be a commercial expense for the purpose of a business of disbursement made for the purpose of earning the profits of such business. If a sum was paid by the assessee conducting his business, because in conducting it, he has acted in a manner which had rendered him liable to penalty, for an infraction of law, it could not be claimed as deductible expenses as it could not be called a commercial loss incurred in carrying on his business. Infraction of law, according to the Supreme Court, was not a normal incident of business.