TMI Blog1980 (2) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... nary general meeting of the company held on 20th October, 1947. The ITO repelled the claim. He held that the expenditure was not revenue in nature. In the alternative he held that the expenditure was of a capital nature because it was incurred for the purpose of defending the articles and memorandum of association of the company. The assessee went up in appeal but the AAC dismissed. The assessee then went up to the Tribunal. The Tribunal held that by the first impugned resolution the said articles of association of the company was recast. The articles of association dealt with the day-to-day conduct of business. It is virtually the constitution of the company. The expenditure incurred in defending the articles of association was incurred fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged in the suit, were passed at the extraordinary general meeting of the company on 20th October, 1947. They provided : " (1) That the regulations contained in the document submitted to this meeting and for the purpose of identification subscribed by the chairman thereof, be and the same are hereby approved and that such regulations be and they are hereby adopted as the articles of association of the company in substitution for and to the exclusion of all existing articles thereof ; (2) that Indian Textile Syndicate Ltd. be appointed managing agents of the company for the period at the remuneration and on the terms contained in the draft of an agreement, providing for the same, submitted to this meeting and signed in the margin by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in order to save its business, the expenditure incurred in defending that suit was an allowable expenditure even though defending the suit, in so far as it attacks the second resolution, may not go far enough to be covered by the statutory provisions for allowing an expenditure. Learned counsel invited our attention to CIT v. Bengal Assam Investors Ltd. [1969] 72 ITR 319 (SC). In that case, the assessee had purchased shares in a company in an auction sale. There arose a dispute regarding the value of the shares and a suit was filed. The expenses incurred in conducting the suit were disallowed. It was held that by claiming expenses for the suits for amending the articles of association, the assessee was trying to enhance the value of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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