- (1.) THE Income-tax Appellate Tribunal, Chandigarh, has referred the following questions for our opinion : "1. Whether, on the facts and in the circumstances of the case, the Tribunal rightly upheld the disallowance of the expenditure of Rs. 7,732 ? Whether the Appellate Tribunal has been right in law in holding that the assessee was not entitled to deduction of surtax payable by it in pursuance of the Companies (Profits) Surtax Act, 1964, in arriving at the taxable income ?"
(2.) WE had occasion to deal with a question identical to question No. 2 in Income-tax Reference No. 99 of 1980, (Highway Cycle Industries Ltd. v. CIT [1989] 178 ITR 601 (P and H)), and by order dated November 15, 1988, we decided the matter in favour of the Revenue. Since no fresh material to take a different view is pointed out, for the reasons recorded in the aforesaid decision, we answer question No. 2 in favour of the Revenue, that is, in the affirmative.
(3.) FOR giving opinion on question No. 1, the facts may be noticed. The assessee wanted to purchase land at Nabha and Bangalore for expansion of their manufacturing activities and in order to do so sought legal advice from B. C. Das Gupta and Co. For the legal advice tendered, Rs. 7,732 were paid to the aforesaid company. Ultimately, land was not purchased. When the matter came before the income-tax Officer, deduction of Rs. 7,732 was claimed by way of revenue expenditure. The Income-tax Officer and the Appellate Assistant Commissioner disallowed the claim of deduction on the ground that the expenses incurred were in connection with the purchase of capital assets and the amount paid to the legal adviser would thus be in the nature of capital expenditure. The assessee failed even before the Tribunal.;