1988 (12) TMI 334

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..... law has been referred to this Court under section 256(1) of the Income-tax Act, 1961 ('the Act') for the assessment year 1976-77: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in deleting the legal expenses of ₹ 17,709 incurred in connection with the protection of shares of Mysore Paper Mills Ltd. being the .....

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..... AAC, held that the addition was rightly deleted from the assessment. Hence, this reference. 4. The assessee-company held shares of Mysore Paper Mills Ltd. In a suit filed by S.B. Jalan against M.L. Jalan and others the company was one of the defendants. The entire expenditure was incurred for defending the suit by the assessee in connection with the preservation of the rights in the shares of Mys .....

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..... ed, be admissible as a deduction under section 10(2)(xv). Deductibility of such expenditure does not depend on the final outcome . of those proceedings. However wrongheaded, ill-advised, unduly optimistic or over-confident in his conviction the assessee might appear in the light of the ultimate decision, expenditure in prosecuting a civil proceeding cannot be denied as a permissible deduction if i .....

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