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2019 (2) TMI 466 - HC - Income TaxAddition on NRI Mobilization expenses - whether said amount was expended towards administrative and other related expenses and the entire expenditure was for the purposes of head office and, therefore, no restrictions in terms of Section 44C? - Held that:- Assessee supported the view of the Tribunal and contended that in an identical situation for the earlier assessment years, the Revenue had not carried the matters in appeal before the High Court. We note that non-filing of the appeals by the Revenue could not have been on the ground of low tax effect. Under the circumstances, the decisions of the Revenue not to challenge the Tribunal's judgment in earlier years in respect of this very assessee, can be seemed as conscious decision of accepting the proposition involved. This question is, therefore, not entertained. Addition on account of replacement of shares by the assessee - whether such loss had to be allowed as business expenditure? - Held that:- The assessee was not under the legal obligation to make the payment in absence of any specific contract or a Court order to maintain its reputation in the market and cordial business relations with the customers. The Supreme Court in case of Nainital Bank [1966 (9) TMI 46 - SUPREME COURT] in similar circumstances, had held that such a claim was allowable under Section 10(2)(xv) of the Indian Income Tax Act,1922. In such case, large quantity of jewellery pledged with the respondent assessee bank by its constituents and currency notes were stolen by dacoits from the premises of the bank. In regard to the loss of jewellery, the bank settled the claim and claimed a loss as a business loss expenditure. The Supreme Court held that sole question to be judged is whether the bank in incurring the expenditure acted in the interest of and for the purpose of its business. It is also agreed that the credit of a banking business is very sensitive. It largely thrives upon the confidence which its constituents have in its management. To maintain such confidence, the management had to make concessions to preserve the goodwill and relations with its clients. Under such circumstances, the expenditure was allowed. No question of law is, therefore, arises.
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