Commissioner Of Income Tax, West Bengal v. Birla Cotton Spinning & Weaving Mills Ltd. & Ors

SOO33 ret TTT, TheatTe |aay oe.farzert eres feafaa wee alfa faca . 7 me (Commissioner of Income-tax, West Bengal --......, Birla Cotton Spinning & Weaving Mills)nr(17 amet, 1971) "oUF > (Ro Bo Yo BTS AT Yo Uo War) oe (i) afeeat grandaa az1922—are 10(2) (XVv)—-: . oy fratfedt oraat& aahaan arateoat fea tenBH TRA A_- fafa-freg ga sitea avert stdarfgal ar sfaare weaA at aaayoSANT RAT Fae RA aeHBaela gata Halit J—sara. Sfafrsaa et sealers,(ii) are 10(2) (XV)—3aa oa ‘BITAIT B TATRA FB fare’ are 10(2) (XV)—3aa oa ‘BITAIT B TATRA FB fare’ 10(2) (XV)—3aa oa ‘BITAIT B TATRA FB fare’ (XV)—3aa oa ‘BITAIT B TATRA FB fare’ oa ‘BITAIT B TATRA FB fare’ ‘BITAIT B TATRA FB fare’ B TATRA FB fare’ TATRA FB fare’ FB fare’ fare’7aarafet at laa —ag ara at asiat HAAS sata & fare’ carafe & at laa —ag ara at asiat HAAS sata & fare’ carafe & laa —ag ara at asiat HAAS sata & fare’ carafe & —ag ara at asiat HAAS sata & fare’ carafe & ara at asiat HAAS sata & fare’ carafe & at asiat HAAS sata & fare’ carafe & asiat HAAS sata & fare’ carafe & HAAS sata & fare’ carafe & sata & fare’ carafe & & fare’ carafe & fare’ carafe & carafe & & ,(ii) are 10(2) (XV)—3aa oa ‘BITAIT B TATRA FB fare’ are 10(2) (XV)—3aa oa ‘BITAIT B TATRA FB fare’ 10(2) (XV)—3aa oa ‘BITAIT B TATRA FB fare’ (XV)—3aa oa ‘BITAIT B TATRA FB fare’ oa ‘BITAIT B TATRA FB fare’ ‘BITAIT B TATRA FB fare’ B TATRA FB fare’ TATRA FB fare’ FB fare’ fare’7aarafet at laa —ag ara at asiat HAAS sata & fare’ carafe & at laa —ag ara at asiat HAAS sata & fare’ carafe & laa —ag ara at asiat HAAS sata & fare’ carafe & —ag ara at asiat HAAS sata & fare’ carafe & ara at asiat HAAS sata & fare’ carafe & at asiat HAAS sata & fare’ carafe & asiat HAAS sata & fare’ carafe & HAAS sata & fare’ carafe & sata & fare’ carafe & & fare’ carafe & fare’ carafe & carafe & &safam cara 21 sah watt STCaTT HI Matsa Al gata gt aat alag"OCBIRSTE H AaB mega atearafa va arfeaat st afazer.Wet| -* fratfedd 4 1941-42 & 1947-48 faut ad at aaa aoa arta| (eae Bellet) H ae TIT aTAe Bl Fray HVA F 1952-53, 1953-54,1954-55 faateg aut F BAT: 3810 eq, 1,42,377 way aar 2,42,.688 eq,egy fear arty faatfedt ga coat at ‘arena cag’ at dar 8a et areaaraax afafaaa, 1922 at arer 10(2) (XV) waar argafers wa FX are 10(1)B aalst Heel F wr FH qa ar arar fear ar) maHe afesre FX ga aa Fyaaa wt fear) agian agar (atta) age adie afew F orane afraraBMAD Bt HAA Tat| gaH Tea faatfeal + saa ufafraa st aret 66(1)& aelat waar at fe afrarar area a veye fafaser axa F fay ssayaraa at fading at, afasey A aay ar frat stag BA gu TAT eararay at ag fafas cea fading for fe ca area F glo ga ® ane“ae wal araatfigat & fraifedt & teat F ot eae fear ar aor ag saz urediaaR Cafafera, 1922 et arer 10(7) (XV) azar 10(1) B wet fraifedt &Bareara Ft amar HF aga ett a ?oF sea eaTgaT a ag ufafauifra fear fefaaifedt a fafa-faeg odSeSR atarth ardarfgat ar sfaare wer H gar wk srear< at feazerr Ffan st saa feat ar ag arfufsax adtdiaar at afce 4 earaifaa ar aat agayaa Betat ay|| Sea aaa H ea ea H fass suaAart yesau cararay Fate at ae) ea eararaa & fafavay at arog wea gu at add afea HUA, afafaatita—areare & silat &fae’(aiefe avaa are fefastaas) carafe ‘ara & gosta & satafa’(art fe czas are afaTsifsae) qarafe& aeqa: afew ears 21 gam orate Raa ereare aaa atSAT TUT a al rar se afew sreare F afecam ale aftaat wa arateHAA H mega A mg Barware sara & qa hrs aq aga Barat wTas TeaaT Tift He ear fafatra gt aware (Fer 7)1| COMMISSIONER OF INCOME TAX, WEST BENGAL BIRLA COTTON SPINNING & WEA YING MILLS LTD. & ORS. August 17, 197 l (K. s. HEGDE AND A. N. GROVER, JJ.J lndian Income-tax Act (11 of 1922), s. 10(2)(xv)-'For'the purpose of business', scope of-Expenses incurred before Inves-tigation Con1n1iss;on-Whether deductf!;.1.;. c 10(2)(xv)-'For'the The assessee, a public limited company. incurred legal expenses for representing its case before the income-tax Investigation Commission. The proceeding before the Commission was a statutory proceeding with a view to collecting materials for more taxation. The expenses were claimed by the assessee as a deduction under s.10(2)(xv) of the Income tax Act, 1922. The Income tax Officer, Appellate Assis-D tant Commissioner and the Tribunal disallowed the claim, but the High Court, on reference, held in favour of the assessee. Dismissing the appeal to this Court, HELD: The expression 'for the purpose of the business' ins. 10(2)(xv) is wider than the expression 'for the purpose of earning profits'. The former covers,. not only the running of the business or its administration but also measures for the preservation of the business and protection of its assets and property. The test under the section therefore is whether the expenses were actually and honestly incurred for the preservation and protection of the assessee's business from any process or proceedings which might have resulted in the reduction of its income and profits. [286 G-H, 288D] The earning of profits and the payment of taxes are not isolated and independent activities of a business, but are continuous and take place: from year to year during the whole period for which the busines. coirlinues. If the assessee takes any steps for reducing its liability to tax .which result in more funds being left for the purpose of carrying on the ~usmess .there is ~!ways a possibility of higher profits. Therefore, G ex~nd1ture which was incurred by the assessee in opposing a co-erc1Ve go~ernmental action, with the object of saving taxation and safeguarding business, was justified by commercial expediency and was, hence, allowable under s.10(2)(xv) of the Act. [288 E-H., 289A·F] . Travancore Titanium Product Ltd., v. Commissioner of Income-tax Kerala, 60 I.T.R. 277(S.C.) and Smith's Potato Estate Ltd. v. Bolland, 30 T.C. 267, referred to. H ... C.I.T. Calcutta v. Calcutta Landing and Shipping Co. 77 T.T.R. 575 and Bansilal Abirchand Spinning and Weaving Mills v. C.I.T. Poona, 81 I.T.R. 34, approved. CIVIL APPELLATE JURISDICTION : Civil 1351 to 1353, 1897 and 1241 of 1968. Appeals Nos. Appeals from the judgments and orders dated March, 3, 1967, February 9, 1968 and June 28, 1967 of the Calcutta High Court in Income-tax Reference Nos. 136 of 1962, 154 of 1964 and 54 of 1963 respectively. Swarup, Solicitor-General, S. T. Desai, N. Sachthey and B. D. Sharma, Jagdish Swarup, Solicitor-General, S. T. Desai, S. K. Aiyar, R. N. Sachthey and B. D. Sharma, for the appellant (in C. As. Nos. 1241 and 1351 to 1353 of 1968) Sachthey and B. D. Sharma c B. B. Ahuja, R. N. Sachthey and B. for the appellant in C. A. No. 1897 of 1968). B. Sen, A. C. Mitra, N. R. Khaitan, 0. P. Khaitan, B. P. 1\faheslnvari and Krishna Sen, for respondent (in C. As. Nos. 1351 to 1353 and 1897of1968). Krishna Sen, N. R. Khaitan, 0. P. Khaitan and B. P. l\f ahesh1vari, ahesh1vari, for respondent (in C.A. No. 1241 Krishna Sen, N. R. B. P. l\f ahesh1vari, ahesh1vari, for of 1968.) The Judgment of the Court was delivered by Grover, J. These appeals from a judgment of- the Calcutta High Court have been brought by certificate under s. 66A (2) of the Indian Income tax Act, 1922, herein-after called the 'Act' and involve a common question, namely, whether the law charges incurred in connection with the proceedings before the Investigation Commission were an allowable deduction in computation of the profits of the business of the assessee. HUA, 7g aa weil-vifa, afafeaa at gar 8 fe feed ar ardarfan Meqqaysada ar, fae areare aaa H earae Aidt 3, ofafatta HC AT aE Warafasred ata % fore fe ag segue afafeare 2, fafa sriaifgat wea 9SUT aT FI welal, afe gaxt dt at aareata zt iar 3 at, aY are 10 (2)(XV) # aeta metal B wr A qaqa gett1. Va sag at aetdy za araaifzateo oafea ofr at frie ade. afaa fafavag at tad ec fauifedwa gt aoa area F art H fear a curl, afadat, aeafar aratarat aTgfeagaaafar areafasaial ate saraardt aat &a ara eax a8 sana fax feat Wh afe var arvarz 2 at faaifeat & fea at fafa age ardarfeat &® fac& aaa Bory ay agaa weit & wr 8 ora & afaa aat feat at aaar (FT 8)| aa ara| ary al art aret afsaraaatdt ae & fe faaifcdt afrat sfeat atc ardarfgat & faeg, fare vast ora aie are Fatt aaaat at, attart S aferaa AK awaa F fae A aga sana fear aral ag altdfan wa A aye Garaqaid & goad feat var 3? ae awn F adtgrat fe faaifedt are wea Aa al dla Haare & araey H fear Taraga sagch frame grata Ha at arent| eae Wh ag cag Hrxare 3 faagate at aa sazarfas oggea A grasa aie eaaifad art ary aTAAT TAT HL BT FAT HIST BH May eaaea Peareara ad} 21. a artarfeaiST Cat ate J, AIT Hreare faaal arqut sratafa aw waar zat & sawatua 4 afaag fed att ge (Far UW)a: fafas nate afsatfcat : 1968 #8 fafaa do 1351 F 1353, 1897 aiz1241. Y¥«$1963 %1962 araac % m fdeaar fam dear 54H qo 136, eaHaT 1964 Vea % aaraHr B® fata eaT: do atte 154 3 aT, six1967, 9 Bart, 1968 MX 28 Ta,1967 faata ate great % farg a Tsait| ' aatarat wt ate @(1968 at fafaa adieHo 1351 F 1353 7) ART HAAMST ata,Bl Trey eqEq,HAAl Uo To Zals, Wo Ho FAL,AlXoUAo FAT WIT Alo So WalWas Flo Fo UEFA, Alto Uo Hat AIXalo gto mat attaret at ica(1968 at fafa adieHo 1897 #) Tau at We a qaeft Sto Ba, Uo Plo fAAT, VAS Mio AaaHo To Gata, Mo To assed we gardHol aa (1968 ar fafa ana ao1351, 1353 Wie 1968 aTfafast atta do 1897) meal Bl MT aHU SUT Ft, aasl Uto WiXo Bara,(1968 at fafaa adeAlo To alt MIT Alo Gro HZVattHo 1241 7). rataTaa ar fauta earatfagfa vo Uo max a feat| araifacta wact— 1. SaHT set aM F fata H fees A aha weda waeafafaaa, 1922 (faa agi mt cafefsan’ser aot 2) at are 660 (2) ®asta TAWA Ht HY TE s MIT sa Va A uM gt sya Se fH sar weagur wialT(eaecling alma) & ana srdafeat at ara sama fafe-rarefaatfedtHIT F TA HT ATA A aaa Herat at ? 2. wan dat Hl aalat mata fafas wttt Peat1351-1353/68 #aera ga mare &1 faateat ag 1952-53,1953-54 aur 1954-55 F faathea? 4,at ua qfera fafats wrod %, fauna faaiear ag 1941-42 & 1947-48 a% aTAAT WAIT AAT FH AAeT AIT RAH Bt Teal F 3810 Vy 142377 waa qar242688 eae ena fear, gtaaat at,fare ‘ararcay: eq’Her TATaT,faatfeat § aaa afafaaa, 1922 (fea att sei afafaaa sar mar 2).71.ater 10(2)(XV) at argaters wr Farce 10(1) & aela sell & wT A aayfeat, araat afaardy A at at ara wefeatagran aTgat (atta) The facts in the first batch of appeals i.e. C. As. 1351-1353/68 may be stated. During the assessment years 1952-53, 1953-54 and 1954-55 the. assessee., which is a public limited company, spent Rs. 3810/-, 1,42,377/- and Rs. 2,42,688/- for re.presenting its case before the Investigation Commission relating to the past assessment years 1941-42 to 1947-48. These expenses which were termed as "general expenses" were claimed by the assessee as deduction under s. IO (2) (xv) or in the alternative under s. 10 (I) of the Income tax Act 1922, hereinafter called the 'Act'. The Income tax Officer disallowed the claim. His order was upheld by the Appellate Assistant Commissioner and the Appellate Tribunal. Thereupon the assessee moved the Tribunal under s. 66 (1) of the Act to state the case and refer the question of law arising out of its order. The Tribunal submitted a common statement of the case and referred the following question to the High Court :- B "Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the law charges incurred in connection with the proceedings before the Investigation Commission were not allowable deductions in computation of the c profits of the business either under s. 10 (1) or under . 10 (2) (xv) of the Income tax Act, 1922 ?" The High Court held that the expenditure incurred by the assessee in opposing an illegal and coercive government action with the object of saving taxation and safeguarding D the business was justified by commercial expediency and was an allowable expenditure. It is necessary at this stage to notice the purpose of the Taxation of Income (Investigation Commission) Act E 1947, hereinafter called the 'Investigation Commission Act' as also some of its relevant provisions. That Act was enacted for the purpose of ascertaining whether the actual incidence of taxation on income was and had been in recent years in accordance with the provisions of law and the extent to which the existing law and procedure for F the assessment and recovery of such taxation was adequate to prevent the evasion thereof and to make provision for investigation into such matters. Section 5 (1) conferred power on the Central Government to refer particular cases or points to the Commission for investigation and report if the Government was of the opinion that there had been G substantial evasion of payment of income tax in such cases. If in the course of investigation the Commission had reasons to believe that some person other than the one whose case was being investigated h!ld avoided payment of income tax the Commission was authorised under sub-s. (4) of s. 5 to report to the Central Government. The H ultimate object of investigation was collection of material showing evasion of tax so that the avoided income ~ould be subjected to taxation and penalties imposed for evasion. SectiJn 5 (1) of the Investigation Commission Act was struck down by this Court as unconstitutional in Shree Meenakshi Mills Ltd., Madurai & Others v. Sri A. V. Visvanatha Sastri & Another([1]). Similarly s. 5 ( 4) was decla-red to be void and unconstitutional in Surajmal Mohta & Co. v. A. V. Visvanatha & Another.(2) qar adie afancm ¥ sah gia at laa war adie afancm ¥ sah gia at laa war afancm ¥ sah gia at laa war ¥ sah gia at laa war sah gia at laa war gia at laa war at laa war laa war warga oz fastfedt 4 afafaaa oz fastfedt 4 afafaaa fastfedt 4 afafaaa 4 afafaaa afafaaaal qtr 66(1)% ata afanea & aaraad Pear fe az att alee a saya qtr 66(1)% ata afanea & aaraad Pear fe az att alee a saya 66(1)% ata afanea & aaraad Pear fe az att alee a saya ata afanea & aaraad Pear fe az att alee a saya afanea & aaraad Pear fe az att alee a saya & aaraad Pear fe az att alee a saya aaraad Pear fe az att alee a saya Pear fe az att alee a saya fe az att alee a saya az att alee a saya att alee a saya alee a saya a saya sayafafaa saat saatarga at faacm aad gc fazfaa st) afamea FATA wT at faacm aad gc fazfaa st) afamea FATA wT faacm aad gc fazfaa st) afamea FATA wT aad gc fazfaa st) afamea FATA wT gc fazfaa st) afamea FATA wT fazfaa st) afamea FATA wT st) afamea FATA wT afamea FATA wT FATA wT wTwan arareg fare sega fear ate ea eararaa at fara cea facta feat— arareg fare sega fear ate ea eararaa at fara cea facta feat— fare sega fear ate ea eararaa at fara cea facta feat— sega fear ate ea eararaa at fara cea facta feat— fear ate ea eararaa at fara cea facta feat— ate ea eararaa at fara cea facta feat— ea eararaa at fara cea facta feat— eararaa at fara cea facta feat— at fara cea facta feat— fara cea facta feat— cea facta feat— facta feat— feat— 3. asa earataa a az afafaatfca fear fa faatfedl F arearzt atfgatart aar Huard & aaa & vee & fafe-faeg vd atiss areata waareayat sfaare az H at aaa soma feat ar, az sqaatfan adidiaar at aseaTaaa WL AYAT FAT AT7 As a result of investigation into the affairs of Birla group of concerns the case of the assessee was referred to the Commission while it was functioning for investigation. The assessee engaged eminent lawyers and incurred the expenses in question in conducting appropriate proceedings c before the Commission as also in courts where the vires of the aforesaid Investigation Commission Act were chal-lenged. Sub-section (!) of s. IO of the Act provides that tax shall be payable by the assessee under the head profits and gains of business, profession or vocation in respect of the profits and gains of any business, profession or vocation carried on by him. Among the allowances which are not to be included in the computation of such profits and gains it is provided by sub. s. (2) (xv) of s. 10 as follows "any expenditure not being an allowance of the nature described in any of the clauses (i) to (xiv) inclusive, and not being the nature of capital expen-diture or personal expenses of the assessee laid out or expended wholly and exclusively for the purpose of such business, profession or vocation". The expression "for the purpo·se of the business'' is essentially wider than the expression "foi; the- purpose of earning profits". It covers not only the running of the business or its administration but also measures for the preservation of the business and protection of its assets and property. It may legitimately comprehend many other acts incidential to the carrying on of the business. In Travancore Titanium Product Ltd. v. Commissioner of Income Tax, Kerala([3]) the position relating to expenditure (2) 261.T.R. I A which can be deducted under s. IO (2) (xv) of the Act was-summarised thus : "The nature of the expenditure or outgoing must be adjudged in the light of accepted commer-cial practice and trading principles. The expenditure B must be incidential to the business and must be necessitated or justified by commercial expendiency. It must be directly and intimately connected with the business and be laid out by the taxpayer in his character as a trader. To be a permissible deduction, there must be a direct and intimate connection c between the expenditure and the business, i.e. between the expenditure and the character of the assessee as a trader, and not as owner of assets, even if they are assets of the business." It is well settled by now that the deductibility of ex-, D penditure incurred in prosecuting the civil proceedings to resist the enforcement of a measure, legislatiye or execu-tive, which means restriction on the carrying on of a busi-ness or to obtain a declaration that the measurt' is invalid, would, if other conditions are satisfied, be admissible as a deduction under s. IO (2) (xv). Deductibility of such E expenditure does not depend on the final outcome of those proceedings. However, wrong-headed, ill-advised, unduly optimistic or over confident in his conviction the assessee might appear in the light of the ultimate decision, expendi-ture in prosecuting a civil proceeding cannot be denied as a permissible deduction if it is reasonably and honestly F incurred to promote the interest of the business. (See Sree Meenakshi Mills Ltd. v. Commissioner of Income lax Madras. (I) 4, wat Satara are seam (eaeditaa wea) daz, 1947 (fra artget saedlitaa dina Caz” Hat agrz) Tal FR VaR Gana sqaeay Fafuay at tear mavag 21 ag afafiam og afafafeaa aasata & farafafaafad fear var at fe aa za ast FHfafa & sqaeat F aqart aaqt Ht HT areata WIT TST AT ar oeT ze aa va Hera H featea ea wal& fac adara fafa ote ofear faa facare aa 2 agar wt H asaaa H fear& fac ag qatar 2 aa ta anal F waom F fa wa a sada fea Teaia 5(1) Betta azaret at ag afer gare aed oie ag faae araat arfagat at, afe avait Hl ag ua et fH Ua amat A agar F aaa ar arkaaaqdaa gard, wave ed fem % far arate afrdfaad wtafe aeqam& shea Fo arate at ten favara Hea sr area et fe faa safer% arse aTaAg et tart, saa afafeaat geo cafes aaa BT Tay HA Gams ayymaT BY TUT 5 Ht Seare (4) % aes oifasafear aar ar fe ag sxeataHlt BT fers HtWATT a aftaa sear saarafaal at, fara Hx FT" gqdaa afma dar at, dag wear ar frat fe tet ore B aadaa % fac, faraqt ara wt & aar gar 2, afadfaa sua va atfeadt F aewta arar arae| ott dart face faifaes aged ate ge wea aay st To ato faxqarameat ate gH aea(') ara aaa A gaedtiiag wala ae BT are 5(1) aTga eqrataad watfaarfan eta # ataie Tt aaa atiga Hz fear at| gal WHITAta Aa Algal Woe HeTAt TATA Vo Fofasaara areal Ale TH Bea (2) are4aaa Hare5(4) ya ate watlaarite atfoa st ag at., (') 26 HIX0 elo Alxo 713. OS. fata aa & agearat ® arael F gga Re Gare faaifesdy erAaa Bat at, wa fe ag gage R fau arp az tal at, fadfna faar gar|syfaatfedtaa giana & arat aatet ates at car daz ate at fafeaieaar arta aan A eararaah watt arg ® WY at, ane, aghaar weiwiaaifgat awH ysaqqa equt at sara fear|ee feo6. at 10 Ft sqarer (1) F az soafaa 8 fH fastfedt ar sak areafeay are waz, ahs ar ezagia ¥ ara aie afaary st arza wz Hrearz ar eqqara & ara ug afar hue h ada aq a| a ara atkafrara el daar F at ata aftafad agi fer adh gat art H ger 10et STAD 2(15) are suafaa #, ot ga care eH |“aret 10(2) (XV)—tar aig er i dz (1) 8 (14) awewate feat ds # afua yale ar ate aa 2 akwa Fare, aferaT cua & sate & fry galas wie mata eT H faaifaa fee 71ar eaa fay aa fraifedt % daftee ext ut using oq at safe mT e7, “BTCA & casa H fee (wre fe aeae are fz fasitaa)”, “ara SUsat H east H faa (mix fe aeaat am atzA mifsea)” qarad &atqe: afew eage 8 gah wats saa sae BAIA aT saat yeaa avat atar g afee areare & ofa ate arfeaay va arate & ataaeqa AT ard SHAT aaa A gains geT aga a wat et sash yeaaaifva ex war fafaedana et anar 2| alaaare fedfaaa sizaz fafaze TATMARL AGIA BWA!) are ATH FY sa egg H cide H, feast wctdt afefanHT ater 10(2) (XV) % aela at oi wadt 2, das Haz Fel TAT F— Vega at favat at safe at area afafsan sar Va eqrarfea,faarat #t afee H cqrafaatia fear arar afer| aaa aitart HF arg.afte eT F gat wifee at afafsas aistaar at afte & gaat.AawMHI Bat aay ar ag earatfaa Har arfEr| qe ayyWear a:.ae aface wr F arearz & acafeaa gar arfee ate wearar st earaqradat gfaaa 4 38 faatfaa azar arfec| masa geld & fae eae ateBILAL H geet Ate afase qearey rar ata, wale eaq-aar eqrardt:% eq F faaffedt at afaaa & ata ae araey elat afer, + fe arfetatB earatwT H, ae F arzare at arfeaat at ary’| Aeguat8. ag wa wal-vifa gitfeaaat ger 2 fe faanitar.ardofan & cata sr, Faas sreart sara F enraz zea a, Mattes Ha & faca ae stor afasta ath far fr az mega atafaaia 3, fafaa (1) 60 a1%0 eto AIXo 277. The point which has presented some difficulty at least in the English courts is whether the expenditure incurred G by the trader in fighting the Revenue's assessment can be regarded an allowable expenditure. In Smith's Potato Estate Ltd. v. Bolland ([2]) expenses had been incurred in filling an appeal against the decision of the Commissioners of Inland Revenue to the Board of Referees in the matter of certain expenditure which had been claimed by the H assessee as an allowable deduction. It was held by the majority (Viscount Simon and Lord Oaksey dissenting) that the expenditure was not an allowable. decuction for income tax and excess profits tax purposes. The basiS" of the view ~f the m,ajority was that the expenses on the liti-gation undertaken for the purpose of reducing the amoum of tax payable was not incurred by a trader for the purpose of his trade but partly atleast for the purpose of his rela-tionship to the crown as a tax-payer. Therefore the expenditure was not wholly and exclusively for the purpose of the trade. Viscount Simon and Lord Oaksey, who took the contrary view, considered that attention should be concentrated on the statutory words that litigation under-taken for the purpose of reducing the amount of tax pay-able was undertaken "wholly and exclusively" for the pur-pose of the trade in that the reduction in the amount of tax increased the traders' monetary resources and so promoted the carrying on of the trade and the earning of the trading· profits. (See also Simon's Income tax, Second Edition. Vol. 2, pages 216-217). In Commissioner of In,come tax. Calcutta v . . Calcutta Landing & Shipping Co. Ltd. (l) the Calcutta High Court has sought to distinguish the language of s. IO (2) (xv) from that of the provisions in the English Income tax law and has given weighty reasons for accepting the opinion of Viscount Simon and Lord Oaksey, parti-cularly, because of the observations of this Court in the decisions which we have already noticed. The above case was followed by a Full Bench of the Bombay High Court in R. B. Bansi/al Abirchand Spinning & Weal'ing Jfil/s v. Commissioner of Income tax, Poona(2). Learned counsel for the Revenue has relied upon the observations extracted at an earlier stage from the cast: of Ti·avancore Titanium Products Ltd(3) and has argued that there must be a direct and intimate connection between the expenditure of the business, i.e. between the expenditure .and the character of the assessee as a trader and not as an owner of assets. We are unable to appreciate how these observations which were made in the light of different facts in any way militate against the view of Viscount Simon .and Lord Oaksey in Smith Potaio Estate case([4]) as also the decision of the Calcutta High. Court in Calcutta Landing .& Shipping Co. case([1]). It may be pointed out that in the (I) 77 l.T.R. 57;, -.tll 6~ l.T.R. 277. C.l.T. V. BIRLA COTTON & SPG. MILLS (Grover, J.) \ decision relied upon by the Revenue the question was \vhethef the tax imposed under the Wealth Tax Act on the owner of assets was a permissible deduction under s. 10 (2) (xv) of the Act. It was emphasised by this Court that the charge of the tax was the same whether the assets were part of or B used in the trading organisation of the O\\'ner or were merely owned by him. The assets of the tax-payer whether incorporated or not became chargeable to tax because they were owned by him and not because they were used by him in the business. The position is quite different when it has to be decided whether an allowance contem-c plated in s. 10 (2) (xv) is deductible.