TaxTMI 
TaxTMI 
1995 (8) TMI 94
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....ired to bear 25% of the expenses along with M/s Diksha Holdings P. Ltd. incurred upto the date of the execution of the agreement and to be incurred thereafter by DAPL on brokerage, commission and advertisement. 3/4th of the expenses was to be borne by the assessee and 1/4th by M/s Diksha Holdings P. Ltd. Assessee received a sum of Rs. 23,35,086 as its share out of the deposits received upto the date of execution of the agreement. The receipts upto12th Nov., 1987were also apportioned between the assessee and M/s Diksha Holdings in the ratio of 75% and 25% respectively. A dispute seems to have arisen between the parties regarding the agreement executed on31st March, 1984relating to sharing of the deposits and the corresponding expenses. Neither the assessee nor the Diksha Holdings (P) Ltd. were responsible to the original depositors for any refund. There was a demand from Industrial Finance Corporation ofIndiaasking for the return of the amounts which the assessee readily agreed and the agreement between DAPL and BHL had even been cancelled. Thereafter on 13th Nov., 1987, there was again an agreement between DAPL, the assessee, namely, M/s Divya International (P) Ltd. and M/s Diksha ....
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.... on that account is, therefore, in order and no interference is warranted. The appeals of the Revenue are accordingly dismissed. 5. In assessee's appeals common issue involved is relating to allowance of deduction on account of certain expenses claimed by the assessee. As already observed, assessee had entered into an agreement with DAPL and M/s Diksha Holdings P. Ltd. on 31st March, 1984 by virtue of which assessee was entitled to receive share of deposits on account of providing licences in the shopping complex. Assessee was entitled to retain these deposits until these were refundable to the licensees. The refunds were due only after the termination or determination of the licence agreements. The licence agreements were ordinarily for a period of more than 90 years. As per the said agreement dt.31st March, 1984the assessee was to share the expenses incurred by DAPL on account of advertisement and publicity, commission and service charges incurred by them in connection with obtaining the deposits on account of providing the premises on leave and licence basis. The said agreement, as already observed, was terminated by an agreement dt.13th Nov., 1987. The entire amount received b....
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....nt dt.31st March, 1984. And whereas the amount of Rs. 4,48,55,964.15 accrued to the party of the second part as its share out of the shop deposit in terms of agreement dt.31st March, 1984. And whereas an amount of Rs. 1,49,51,989.85 accrued to the party of the third part as its share out of the shop deposit in terms of agreement dt.31st March, 1984. And whereas by mutual agreement between the parties hereto it has been agreed upon to terminate the said agreement dt.31st March, 1984with immediate effect. And whereas the party of the second part has since repaid the said amount of Rs. 4,48,55,964.15 to the party of the first part which the party of the first part do hereby acknowledge. And whereas the party of the third part has since repaid the said amount of Rs. 1,49,51,989.85 to the party of the first part which the party of the first part do hereby acknowledge. Now it is hereby agreed as under: 1. Agreement executed on31st March, 1984by the parties hereto and subsisted between them stands cancelled by mutual agreement from this date. 2. Parties of the second and third parts hereto shall not be entitled to hereinafter to receive any share in shop deposit hereinbefore accruin....
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....g voluntarily agreed to refund the deposits to DAPL and if they had agreed to share the expenses notwithstanding the refund, such an act would be an act of voluntary surrender and cannot be said to have been done for business considerations. Such a surrender of the expenditure is not allowable in any case as a legitimate expenditure incurred for earning of income. 10. We, therefore, are of the considered view that with termination of agreement dt.31st March, 1984by agreement dt.13th Nov., 1987, the liability of the assessee to bear the expenses ceased. If assessee has borne the expenditure notwithstanding that they had no liability to bear the same the expenditure cannot be considered to have been incurred for purposes of earning of any income. As such disallowance made by the Revenue is warranted. In the light of our decision in this regard it is not necessary for us to consider as to under what head the deduction would be permissible to the assessee. 11. The only other issue in assessee's appeal for asst. yr. 1985- 86 is relating to the gifts received from abroad. A sum of Rs. 6,27,643 had been received by means of a bank draft dt.7th Feb., 1984. This issue has been set aside b....