2012 (4) TMI 218

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..... Respondent.   JUDGMENT : (PER DR.D.Y.CHANDRACHUD, J.)   1. This reference under Section 256(1) of the Income-tax Act, 1961 at the behest of the Revenue seeks the opinion of this Court on the following question of law :- "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the settlement charges of Rs.5,50,750/- and legal expenses of .....

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..... 0,750/- which was treated as settlement charges. The assessee also incurred legal expenses of Rs.1,65,500/-. The assessee's claim for deduction of these two items was disallowed by the departmental authorities, but was allowed in appeal by the Tribunal. 2. The submission which has been urged on behalf of the Revenue is that the amount of Rs.10 lakhs was paid by the assessee to the conductor of th .....

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..... assessee and had to be renewed by the assessee. Accordingly, when disputes arose, upon which a suit was instituted before the City Civil Court, the assessee could remove the hindrance and obstruction in the conduct of the business in the premises by payment of the settlement amount. This was a matter of commercial expediency and since the obstruction in the conduct of the business was removed by .....

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..... nd conditions of the licences and permissions issued by various authorities. The assessee was required to pay all the licence fees in respect of the various licences, except the beer licence fee. The agreement contained a declaration that it did not constitute an agreement of tenancy and it did not confer any right upon the premises in the conductor. In this behalf, it is evident that the assessee .....

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..... o interest by way of tenancy or otherwise in respect of the premises. Consequently, the payment which was made by the assessee was one which in the true sense of the term was for removing the obstruction or hindrance in conducting and managing the restaurant and must be regarded as a matter of commercial expediency. The legal expenses in the amount of Rs.1,65,500/- are also clearly an allowable de .....

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