COMMISSIONER OF INCOME TAX Vs. H HIRJEE

JUDGEMENT

(1.) THIS is a reference made by the Tribunal, Calcutta Bench, under s. 66(1) of the Indian IT Act at the instance of the CIT in which the following question has been framed for the opinion of this Court :

(2.) THE assessee was the sole distributor of the products of Bengal Potteries. He was prosecuted by the Enforcement Authorities on a charge of selling the goods at prices higher than were reasonable. A part of his stock was seized and taken away. He defended himself and eventually he was acquitted by a Magistrate. He spent a sum of Rs. 10,895 on his defence and he claimed that sum as an allowance in arriving at the taxable income of his business. Under s. 10(2)(xv) an allowance is made in respect of any expenditure, not being in the nature of capital expenditure or personal expenses of the assessee, laid out or expended wholly and exclusively for the purposes of any business, profession or vocation.

(3.) IN every criminal prosecution where the matter is defended to protect the good name of a business or a professional man, the fear of possible fine or imprisonment must always be there. But the Tribunal have pointed out that this was so inextricably mixed up with the protection of the good name of the business that it can well be found that the money spent in defence in the criminal prosecution was spent solely and exclusively for the purposes of the business. The finding is a finding of fact and is binding upon us.