Law:

Section:

Section 28(i) of the Income-tax Act, 1961 (Corresponding to section 10(1) of the Indian Income-tax Act, 1922) – Business loss deductions, - Allowable as – Assessment year 1959-60 – ITO disallowed deduction of amount paid as professional fee in wealth-tax case – Tribunal upheld disallowance – Whether with retrospective amendment by section 4 of Income-tax (Amendment) Act, 1972, any amount paid as wealth-tax by assessee would not be allowable as business expenditure under section 10(1) of 1922 Act in arriving at assessee's total income – Held, yes – Whether, however, as law declared by Supreme Court in case of Indian Aluminum co. Ltd. v. CIT [1972] 84 ITR 735 , assessee was justified in claiming amount of professional fees in relation to wealth-tax proceedings as wealth-tax levied was itself in respect of asset of trading company – Held yes FACTS For the assessment year 1959-60, the assessee-company claimed deduction of amount paid by way of wealth-tax as also of amount of professional fees paid in respect of a wealth-tax case. The ITO disallowed the claim. On second appeal, the Tribunal, following the Supreme Court's decision in Travancore Titanium Products Ltd. v.CIT [1966] 60 ITR 277 , held that the deduction with regard to the amount of wealth-tax was impermissible and so also the amount of professional fees, in respect of wealth-tax assessment. On reference: HELD The decision of the Supreme Court in Travancore Titanium Products Ltd.'s case (supra) was superseded by another decision of the Supreme Court in Indian Aluminium Co. Ltd. v. CIT [1972] 84 ITR 735 , in which the Supreme Court held that the wealth-tax paid by the assessee, which is a trading company, on assets held by it for the purpose of its business was deductible as business expense in computing the assessee's income from business and that when a person has a dual capacity of a trader-cum-owner and he pays tax in respect of the property, which is used for the purpose of trade, the payment must be taken to be in the capacity of a trader according to ordinary commercial principles. However, the provision was made by section 4 of the Income-tax (Amendment) Act, 1972, so as to operate retrospectively.…

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