Consistency in tax interpretation prevails: commission paid to secure stay of recovery was not allowed as business expenditure.

Commission paid for borrowing shares and pledging them as security to obtain stay of income-tax recovery was claimed as business expenditure on the footing that it facilitated protection of the assessee's business during pending appeals. The Delhi HC declined to depart from earlier decisions in the assessee's own case on the same point, stressing uniformity and consistency in interpretation of an all-India tax statute. It treated the prior considered view as binding in the absence of overriding reasons to differ, and noted that later statutory provisions allowing similar deductions operated prospectively. The claimed deduction was therefore disallowed.

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Issues: Whether commission paid for borrowing shares and pledging them as security to obtain stay of recovery of income-tax was deductible as business expenditure in computing business profits.

Analysis: The claim was that the commission was laid out wholly and exclusively for the purpose of business because it enabled the assessee to secure stay of coercive recovery during pendency of appeals against tax assessments. The Court noted that the expenditure could, in principle, be viewed as analogous to litigation expenses incurred to reduce tax liability, but it declined to depart from the earlier decisions of the Punjab and Haryana High Court in the assessee's own case. Emphasis was placed on the desirability of uniformity and consistency in interpretation of an all-India statute, particularly where the same point had already been decided between the same parties for earlier years, even after considering the Supreme Court decision relied upon by the assessee. The Court also noticed that later statutory provisions permitting related deductions operated only prospectively.

Conclusion: The commission was not allowed as a deductible business expenditure, and the question was answered against the assessee.

Final Conclusion: The reference was disposed of by declining to take a view different from the earlier binding view followed in the assessee's own case, with the result that the claimed deduction failed.

Ratio Decidendi: In a later reference under the income-tax law, a court should ordinarily follow an earlier considered decision on the same point in the same assessee's case unless there are overriding reasons to depart, and the claimed expenditure will not be allowed where that earlier view is applied.

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