1993 (8) TMI 51

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....essment year 1973-74. The order of assessment for the said year was the subject-matter of two appeals before the Appellate Tribunal, both by the assessee and also by the Revenue. The Tribunal passed a consolidated order in the said two appeals dated August 1, 1986. While considering the appeals, the Appellate Tribunal allowed a sum of Rs. 1,132 as a permissible deduction in computing the agricultural income of the assessee. The said sum represented expenses incurred in connection with sales tax appeals. Aggrieved by the said portion of the common order, the Revenue moved the Tribunal for referring a question of law and the following question (question No. 1) has been referred to this court, at the instance of the Revenue : " (1) Whether,....

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....nse incurred in connection with the sales tax appeals was found to be an admissible deduction. Counsel for the assessee brought to our notice a few Bench decisions of this court. They are Commr. of Agrl. I. T. v. Kartikulam and Alathur Estates [1968] 169 ITR 386 ; Commr. of Agrl. I. T. v. Malabar Industries Co. Ltd. [1988] 169 ITR 390 (Appex.) ; Commr. of Agrl. I. T. v. Emerald Valley Estates Ltd. [1988] 169 ITR 392 (Appex.) ; Commr. of Agrl. I. T. v. Kartikulam and Alathur Estates Ltd. [1988] 169 ITR 393 (Appex.) and Commr. of Agrl. I. T. v. S. Bhaskaran [1988] 169 ITR 395 (Appex.). In the above cases, it has been broadly held that the expenses incurred in filing appeals, revisions, reference applications, etc., (claimed as legal charges) ....

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....e. The only other question is whether a sum of Rs. 2,020 incurred in connection with the alteration of the memorandum of association of the assessee is an allowable deduction. The Appellate Tribunal negatived the plea for allowance holding that this is a capital expenditure. We are of the view that the Appellate Tribunal has not analysed the matter and made an in-depth study into what is revenue expenditure as distinguished from capital expenditure. The latest landmark decisions of the Supreme Court in Empire jute Co. Ltd. v. CIT [1980] 124 ITR 1 ; CIT v. Associated Cement Companies Ltd. [1988] 172 ITR 257 and Alembic Chemical Works Co. Ltd. v. CIT [1989] 177 ITR 377 have laid down the law on the point. This Bench had occasion to conside....