TMI Blog1979 (11) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... the computation of profits and gains of business of the assessee? " The reference relates to the assessment year 1961-62, the previous year for which was the calendar year 1960. The Tribunal has answered the above question in the negative following the order passed by the Tribunal for an earlier year and none of the orders on record or the statement of the case give the full details of the nature of the amount of Rs. 9,000 which was claimed as a deduction by the assessee. However, the references at the request of the assessee for the earlier assessment years have been decided by the Punjab and Haryana High Court and have been reported as Dalmia Dadri Cement Ltd. v. CIT [1972] 86 ITR 577 and [1973] 90 ITR 297. We shall, therefore, refer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges so incurred in connection with the proceedings before the Investigation Commission could be deducted in computing the profits of the business of the assessee. This question was answered by the Supreme Court in the affirmative. The Supreme Court held that the law charges were expenses incurred for the preservation and protection of the assessee's business from any process or proceedings which might have resulted in the reduction of its Income and profits. Even otherwise the expenditure was said to be incidental to the business and was necessitated or justified by commercial expediency as it was incurred by the assessee in opposing a coercive Government action with the object of saving taxation and safeguarding business. The court further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. (P.) Ltd. [1971] 82 ITR 741 (P H), CIT v. Gannon Dunkerley Co. Ltd. [1979] 119 ITR 595 (Bom). He submitted that the principle applicable to the present case should be no different and that, therefore, the sum of Rs. 9,000 is a deductible expenditure. On the other hand, Mr. Varma, learned counsel for the department, pointed out that in Dalmia Dadri Cement Ltd. v. CIT [1973] 90 ITR 297, the Punjab High Court has taken note of the arguments based on Birla Cottan Spinning and Weaving Mills Ltd. [1971] 82 ITR 166 (SC) and held that this decision of the Supreme Court did not cast any doubts on the view that had been expressed earlier in Dalmia Dadri Cement [4972] 86 ITR 577. He submitted that having regard to the fact that the identical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him of the nature presently in question. In substance what has happened is that the assessee has been subjected to assessments which it considers erroneous and excessive. It has preferred appeals and pending the appeals it had to obtain stay of recovery of tax as the business is to progress in normal course and earn its profits. Though there are no details before us of the tax demands against the assessee, it appears that it has given security to the extent of Rs. 9 lakhs at least which indicates that there were substantial amounts which were being sought to be recovered from the assessee and of which it was necessary in the interests of business of the assessee, to avoid coercive recovery. The only way by which it could do it was to eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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