TRANSPORT COMPANY LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee company, which engaged itself mainly in the business of motor transport, owned several buses and lorries. In 1942 it entered into a contract with another transport concerns, the Tirunelveli motor bus Service company Limited, Tirunelveli, under which fourteen of the assessees buses with their route right were transferred to the latter company. THE Tirunelveli Motor Bus Service Company Limited would not implement the bargain. Litigation ensued. THE assessee filled first O.S. No. 35 of 1945 on 20th April, 1945. That suit was eventually dismissed. That was fallowed up with the institution of O.S. No. 80 of 1946 on 1st November, 1946. Against the decision of the learned Subordinate Judge on O.S. No. 80 of 1946, the assessee preferred A.S. No. 306 of 1949 to this Court. THE judgment in that appeal has been Transport Company v. Tirunelveli Motor bus Company.

(2.) THE accounting year of the assessee was the calendar year. In 1946 the assessee spent sums totalling Rs. 2,510-13-4 and Rs. 2,901 to meet the charge of litigation. Rs. 2,510-13-4 was made up of three heads : Rs. 108-4-0 spent for O.S. No. 307 of 1945; Rs. 28 spent for conducting the proceeding in a claim petition in proceedings in execution of the decree in O.S. No 31 of 1940, and Rs. 2,374-9-4 spent in conducting O.S. No. 35 of 1945. In the same year the assessee expended Rs. 2,901 for conducting O.S. No. 80 of 1946, but these charges the assessee carried forward to the next accounting period when making up the profits and loss statement for 1946. This sum and the further sums expended in 1947 for conducting O.S. No. 80 of 1946 totalled Rs. 4,994-8-0. In the assessment year 1947-48 the assessee claimed Rs. 2,510-13-4 as a permissible deduction under section 10 (2) (xv) of the Income-tax Act. THE claim in the assessment year 1948-49 was fort Rs. 4,994-8-0. THEse claims were disallowed by the by the income-tax Officer. On appeal the Appellate Assistant Commissioner allowed them. THE Department appealed to the Tribunal, which set aside the order of the Appellate Assistant Commissioner and resorted that the income-tax Officer. Under section 66 (2) of the Act the Tribunal referred the following question for the determination of this court :

(3.) THIS passage sets out the scope of the alternative reliefs the assessee asked for in O.S. No. 80 of 1946. One was for specific performance of the agreement between the assessee and the Tirunelveli Motor Bus Services Company. The alternative relief asked for was based on the plea that that contract had been rescinded, in which case the assessees claim would be one based on his original title to the fourteen buses and their route rights.