TMI Blog1969 (11) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... hi Dadri, is a public company which carries on the business of manufacture and sale of cement at its factory in Charkhi Dadri which is situated in what : was formerly the State of Jind. Before the assessee-company was incorporated and the factory was set up, an agreement was entered into between Shanti Prasad Jain, a promoter of the assessee-company, and the Government of Jind State on April 1, 1938, whereunder certain concessions were allowed. Clause 23 of the agreement, on which reliance is placed, reads as under : " The company shall be assessed to income-tax in accordance with the State procedure but the rate of income-tax shall always be 4 per cent. up to a limit of the income of Rs. 5 lakhs and 5 per cent. on such income as is in ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as binding on it. The assessee-company along with some other companies of Dalmia group had engaged some legal consultants for " day-to-day legal advice " whose fees were proportionately divided amongst different companies of the group. The assessee-company's share of these expenses came to Rs. 3,423. The Income-tax Officer disallowed the said expenses on the ground that the nature of the consultation had not been disclosed nor was the basis of the allocation amongst different companies mentioned. In appeal, the Appellate Assistant Commissioner agreed to the disallowance of the said expenses made by the Income-tax Officer. The assessee-company filed an appeal before the Income-tax Appellate Tribunal. which agreed that the practice of appoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with clause (23) of the agreement dated April 1, 1938, referred to above. We are also of the opinion that the sum of Rs. 3,423 on account of legal expenses was rightly disallowed by the Income-tax Officer, the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal. The deduction of this amount was claimed by the applicant-company on the ground that the expense was incurred wholly and exclusively for the business of the company and was not of a capital nature. The applicant-company has not brought anything on the record to show what were the subjects on which consultations of the legal consultants were obtained in order to enable the income-tax authorities to determine whether these subjects related wholly an exclusively ..... X X X X Extracts X X X X X X X X Extracts X X X X
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