AJIT K. SENGUPTA, J.

( 1 ) IN this reference under Section 256 (1) of the Income-tax Act, 1961, the following question of law has been referred to this court for the assessment year 1978-79 :"whether, on the facts and in the circumstances of the case, the Tribunal was justified in allowing the litigation expenses of Rs. 1,58,415 in the hands of the smaller Hindu undivided family incurred in connection with the partition suit as revenue expenditure under Section 37 of the Act?"

( 2 ) SHORTLY stated, the facts are that the assessee, Mahadeo Prosad Shyamsunder, Hindu undivided family, was a coparcener of a bigger Hindu undivided family named and styled as Messrs. Ramdas Mahadeo Prosad. The bigger Hindu undivided family named above was owner of various house properties, certain mines and oil mills.

( 3 ) IN the bigger Hindu undivided family, there were mainly two groups, namely, S. S. Swaika Group and G. V. Swaika Group. A difference arose among the members of the two groups as a result of which a partition suit was filed before the Calcutta High Court. The High Court decided the suit on June 12, 1977, in consequence of which each group was allotted certain properties and business belonging to the bigger Hindu undivided family. The assessee claimed deduction of Rs. 1,58,415 being expenses for litigation in respect of the aforementioned suit. The Income-tax Officer negatived the assessee's claim.

( 4 ) THE assessee appealed to the Commissioner of Income-tax (Appeals) who, after considering the entire factual aspects of the matter and by following the decision of the Andhra Pradesh High Court in the case of Boorugu Nagaiah Rajanna v. CIT, held that the entire litigation expenses claimed by the assessee should be allowed as a deduction in the assessment year under reference.

( 5 ) AGAINST the order of the Commissioner of Income-tax (Appeals), the Revenue preferred an appeal before the Appellate Tribunal. The Tribunal held that the partition suit was finally settled during the previous year relevant to the assessment year under reference. The Tribunal, following the decision of the Andhra Pradesh High Court in the case of Boorugu Nagaiah Rajanna, held that the assessee was entitled to deduction of the entire amount of litigation expenses during the assessment year under appeal.

( 6 ) AT the hearing before us, Mr. Moitra, learned counsel for the Revenue, has contended that the litigation expenses do not relate to the assets of the assessee-Hindu undivided family and, accordingly, they were not allowable as deduction. He has also submitted that, in any event, the claims made are in respect of earlier years which cannot be allowed for the assessment year in question. On the other hand, the contention of Dr. Pal is that litigation expenses are allowable as they were incurred for protection and preservation of the assets of the Hindu undivided family.

( 7 ) OUR attention has been drawn to several decisions to which we shall presently refer.

( 8 ) THE contentions of learned counsel, however, have to be examined in the light of the facts of this case. From the orders of the authorities below, it appears that the assessee-Hindu undivided family submitted its return on December 23, 1978, showing a loss of Rs. 1,24,000. S. S. Swaika, karta of the assessee-Hindu undivided family, was a member of an erstwhile Hindu undivided family which carried on business under the name and style of Messrs. Ramdas Mahadeo Prosad. On account of disputes and differences between the brothers, S. S. Swaika filed a partition and administration suit, being P and A Suit No. 191 of 1972 before this court for partition of the Hindu undivided family properties and assets. In terms of the settlement, the properties and assets were actually divided between S. S. Swaika and G. V. Swaika with effect from June 13, 1977. The business of Soapstone and Dolomite Mines at Bhoraghat, Jabalpur, came to S. S. Swaika, the karta of the assessee-Hindu undivided family,

( 9 ) THE

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