Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1970-71 - Assessee-company appointed its former managing agents as special officers with almost same powers and same remuneration payable to them in their capacity as managing agents - However, assessee had to incur certain expenditure in litigation with Company Law Board with regard to aforesaid appointments - Assessee claimed deduction in respect of said litigation expenses - Tribunal allowed assessee's claim - Whether in view of decision of this court in Rampur Distillery and Chemical Co. Ltd. v. CIT [1983] 140 ITR 725, Tribunal was justified in allowing assessee's claim - Held, yes FACTS The assessee company appointed its former managing agents as 'Special Officers' with almost the same powers and the same remuneration as was payable to them in their capacity as managing agents. During the relevant accounting year the assessee had incurred certain expenditure in litigation with the company law board with regard to aforesaid appointment of managing agent. The assessee claimed deduction of said expenditure as business expenditure. The Department disallowed it. However, on appeal the Tribunal allowed it. On reference : HELD Following the decision of this court in the case of Rampur Distillery and Chemical Co. Ltd. v. CIT [1983] 140 ITR 725, it was to be held that the Tribunal was justified in allowing the assessee's claim. Note : The case has been decided in favour of the assessee. CASE REFERRED TO Rampur Distillery & Chemical Co. Ltd. v. CIT [1983] 140 ITR 725 (All.). Vikram Gulati for the Applicant. JUDGMENT Under section 256(2) of the Income-tax Act, 1961, the following…

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