9911796707
TMI Blog1969 (11) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 excess of Rs. 5 lakhs." The assessee-company was assessed in accordance with this agreement till the Jind State because a part of the Patiala and East Punjab States Union which was formed on August 20, 1948. On April 13, 1950, the Patiala and East Punjab States Union accepted the federal financial integration scheme and became a taxable territory of the Union of India with the result that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 appointment of consultants for a group and then dividing fees amongst the members of the group was being followed by some groups in the business world, but the disallowance was confirmed on the ground that it was not shown that the expenditure was incurred specifically for any business purpose of the company. On the application of the assessee-company, the Tribunal drew up the statement of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to the business of the applicant-company. The phrase " day-to-day legal advice " is too vague, and it cannot be inferred therefrom that the consultations necessarily related to the business of the company. It is also the case of the applicant-company that the amount claimed by way of deductible expenditure was on account of its share of the fees paid to the legal consultants by the group but t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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