Business expenditure deduction applies to litigation costs over managing agents' appointment and remuneration where facts mirror an earlier binding decision.

Litigation expenses incurred in proceedings concerning the appointment and remuneration of former managing agents as special officers were treated as deductible business expenditure under the Income-tax Act. The analysis followed an earlier decision between the same parties on materially similar facts, where litigation over refusal to extend the managing agents' term had been held to be a permissible deduction. On that basis, the expenditure was regarded as wholly and exclusively incurred for the purposes of the assessee's business.

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Issues: Whether litigation expenses incurred by the assessee in proceedings concerning the appointment and remuneration of former managing agents as special officers were allowable as business expenditure under the Income-tax Act.

Analysis: The questions referred were materially similar to those already decided between the same parties for an earlier assessment year. The earlier decision had held that expenditure incurred in litigation questioning the refusal of extension of the managing agents' term was a permissible deduction. As the present controversy arose on similar facts and involved the same parties, that decision was treated as binding.

Conclusion: The litigation expenditure was allowable as business expenditure and was incurred wholly and exclusively for the purposes of the assessee's business.

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