SETH KALURAM KANKARIA Vs. STATE OF U P

JUDGEMENT

(1.) THIS is reference under Section 66 (1) of the Indian Income-tax Act (XI of 1922) as amended in 1939. The facts of this case are fully set out in the statement of the case made by the Income-tax Appellate Tribunal.

(2.) THE assessee had spent a sum of Rs. 9,070 in defending his title on the basis of these four mortgages in the suit brought against him by the receiver. He claimed this amount as an admissible deduction under Section 10 (2) (xii) of the Indian Income-tax Act as it stood at the time of the assessment. Section 10 (2) (xii) is as follows :-

(3.) THE suit filed by the receiver in insolvency was for setting aside the mortgages, and the question, therefore, was whether the mortgages were got executed by the assessee in the course of his business. Even if a part of the mortgage consideration was genuine, on the finding that the mortgages were executed for the protection of Tejmal, it could not be said that the mortgages were executed for the protection of Tejmal, it could not be said that the mortgages were not foreign to the money-lending business of the assessee. In any case, the expenditure incurred, to be an admissible deduction under Section 10 (2) (xii) of the Act, must be an expenditure wholly and exclusively for the purpose of such business. It could not be said that the sum of Rs. 9,070 was spent wholly and exclusively for the purpose of such business, nor does the assessee claim any right of apportionment.