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TMI Blog1964 (1) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... Selvarajulu Chetty carried on the business purporting to claim it, the business, to be a joint family business. Matters went on thus. In 1948, a deed of partnership came into existence and Padmini, the daughter of Selvarajulu Chetty, was taken as a partner. Subsequently, however, Padmini instituted a suit in the High Court claiming hat the business belonged solely to Selvarajulu Chetty as his self-acquired property and that the other so-called partners were not entitled to any interests in that business and sought a declaration that she was solely entitled to the business. There were other reliefs sought in that suit, such as to recover a sum of ₹ 1, 32, 000 received on life insurance policies of Selvarajulu Chetty and jewels belongin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntirety, whether it vested in A or in B. Would the expenditure incurred in relation to such a suit be one that could be described as having been incurred wholly and exclusively for the purpose of the business ? Sri S. Narayanaswami, learned counsel for the petitioner, argues that if the business has to establish its title to an asset or litigate in order to secure its maintenance, it would be properly allowable under section 10(2)(xv). Equally, he argues, when the title to the entire business is in issue, it is the same as saying that the title to each and everyone of the assets of the business is in question. THErefore, he claims that the expenditure must be one which would come within the scope of the relevant clause of section 10(2). It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red expenses. This expenditure was held to be wholly and exclusively laid out by the company for the purpose of its trade. We are really unable to see what parallel there is between the facts of that decision and the present one. That was a case where the company as an entity sought to maintain its right to certain assets, and the legal expenses incurred did not create any new asset at all. If a sum of money is expended for the acquisition or the improvement of a fixed capital asset, it is undoubtedly attributable to capital. But if there is no change in the fixed capital asset, then the expenditure is properly attributable to revenue. The argument of the learned counsel in the present case that what the assessee was doing was to maintain i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income-tax this court pointed out the distinction between expenses of a litigation to maintain an existing title and one where the purpose was to acquire or cure a defect in the assessee's title. In the former, the expenditure would be of a revenue nature and in the latter it would be of a capital nature. None of these decisions cited by the learned counsel for the assessee deals with a case like the present where the dispute is not between the company, on the one hand, and another person claiming title adversely to it, on the other, but between the members of a company or members of the partnership, each one claiming exclusive title to the entirety of the business and of the assets it comprises of. That is a position which wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the business or asset or they may come under a more direct threat by challenge of the right to use or employ them in the business. Such threats leave the question of ownership of the business unaffected. The owner of the assets may be able to continue in business and preserve the goodwill even if the threat is realised. On the other hand, it may be that the loss of the asset or assets will so cripple him as to put him out of business ...... Where the threat is to the ownership of the business the position is different ...... There is a plain difference between these two cases. Where loss of or damage to an asset results there is loss or damage to the trade, as such : where loss of ownership results there is no necessary loss or damage ..... X X X X Extracts X X X X X X X X Extracts X X X X
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