COMMISSIONER OF INCOME TAX, WEST BENGAL vs BIRLA COTTON SPINNING & WEAVING MILLS LTD.& ORS.

The Supreme Court, interpreting Section 10(1) and Section 10(2)(xv) of the Income Tax Act, 1922, held that legal charges incurred by a public limited company in connection with proceedings before the Investigation Commission are allowable deductions in the computation of business profits. The Court affirmed the High Court's decision that such expenditures, aimed at opposing illegal government actions to safeguard the business, are justified by commercial expediency. Consequently, the appeals were dismissed, upholding the High Court's ruling.