PLASTIC PRODUCTS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question referred for our opinion is :--

(2.) THE statement of the case and the judgment of the Income-tax Appellate Tribunal show that the assessee was negotiating with Messrs Potta Engineers Ltd. Leeds, in United Kingdom (hereinafter referred to as the United Kingdom Company) for supply of moulds required in the manufacturing of plastic goods by the assessee. THE United Kingdom Company brought a suit for damages against the assessee claiming that the assessee had committed breach of contract in respect of the purchase of the moulds. THE suit was decreed by the Queens Bench Division for 8,410 as damages along with 2000 as costs. After the decision of the suit which took place on the 18th December 1953, there was a compromise between the two litigating parties under which the assessee agreed to accept moulds worth 6000, and there was the further condition that the judgment given by the Queens Bench Division would thereafter be settled as desired by the assessee. It seems to have been urged that a sum of Rs. 29,997 was incurred as litigation expenses in that suit by the assessee and the assessee claimed this amount as a revenue expenditure deductible from the income under Section 10(2)(xv) of the Income-tax Act. This claim was disallowed by the Income-tax Tribunal and hence the question mentioned above has been referred to us.