Sabyasachi Mukharji, J. - (1.) This is an appeal from the judgment and order of the High Court of Allahabad dated 25th November, 1971.
(2.) The Income-tax Appellate Tribunal had referred to the High Court the following question for its opinion: "Whether, on the facts and in the circumstances of the case, the expenditure of Rs. 50,000/- was a capital expenditure which could not be allowed as a deduction under S. 10(2)(xv) of the Income-tax Act, 1922 -
(3.) The assessee carried on the business of manufacture and sale of woollen goods, cotten textiles and hides and leather products. The activity of tanning hides and manufacturing leather products was carried on under the name and style of Cooper Allen and North West Tannery branches. For the assessment year 1959-60, under the Income-tax Act, the relevant accounting (year) of which being the calendar year ending on 31st December, 1958, the assessee had claimed a deduction of Rs. 50,000/- paid to Messrs Textile and General Supplies Private Ltd. Bombay (hereinafter referred to as "Textile and General Supplies"). The assessee's claim was made on the basis that the assessee was bound under an agreement with Messrs Charles Walker and Co., London to pay that amount to Textile General Supplies for meeting the initial expenditure for establishing it as distributor of the assessee's products. The Income-tax Officer rejected the claim, and the Appellate Assistant Commissioner upheld that decision. The assessee went up in appeal before the Income-tax Appellate Tribunal. The Tribunal also rejected the claim of the assessee. At the instance of the assessee, the Tribunal made a reference on the aforesaid question to the High Court.;