SRINIVASAN J.

The question that stands referred to us is

"Whether the legal expenses of Rs. 3, 900 and Rs. 6, 480 were allowable under the provisions of section 10(2)(xv) of the Indian Income-tax Act ?" *

The facts leading to this question are these. One Selvarajulu Chetty was carrying on a stevedoring business in Madras. He died in I938 leaving Padmini as his only surviving daughter. Therefore, certain relations of this Selvarajulu Chetty carried on the business purporting to claim it, the business, to be a joint family business. Matters went on thus. In 1948, a deed of partnership came into existence and Padmini, the daughter of Selvarajulu Chetty, was taken as a partner. Subsequently, however, Padmini instituted a suit in the High Court claiming hat the business belonged solely to Selvarajulu Chetty as his self-acquired property and that the other so-called partners were not entitled to any interests in that business and sought a declaration that she was solely entitled to the business. There were other reliefs sought in that suit, such as to recover a sum of Rs. 1, 32, 000 received on life insurance policies of Selvarajulu Chetty and jewels belonging to him, his wife and Padmini. The trial judge upheld the claim of Padmini in so far as the movables are concerned. The business asset was however held to belong to the Hindu undivided family. We may mention at this stage that on appeal from that decision, a Bench of this court held in favour of Padmini even with regard to the business assets

It was the expenses of the defendants in that suit that is the subject-matter of the present reference

The Income-tax Officer allowed these expenses in the assessment year 1958-59 But the Commissioner of Income-tax, after notice to the parties, held that the legal expenses were incurred in a dispute regarding the title to the business itself and was not for the protection of the business. He also held that the dispute was between the partners and that the dispute was between the partners and that it covered not only this business asset but other non-business assets as well. According to him, the expenditure could not be said to have been incurred wholly and exclusively for the purpose of the business. This order of the Commissioner was with regard to the assessment year 1958-59. For the assessment year 1959-60, the Income-tax Officer declined to grant the allowance. The further appeals to the Appellate Assistant Commissioner and the Tribunal also failedOn the application of the assessee, the question set out above stands referred to this court

Shortly stated, the dispute in the suit was to declare the title to the business in its entirety, whether it vested in A or in B. Would the expenditure incurred in relation to such a suit be one that could be described as having been incurred wholly and exclusively for the purpose of the business ? Sri S. Narayanaswami, learned counsel for the petitioner, argues that if the business has to establish its title to an asset or litigate in order to secure its maintenance, it would be properly allowable under section 10(2)(xv). Equally, he argues, when the title to the entire business is in issue, it is the same as saying that the title to each and everyone of the assets of the business is in question. Therefore, he claims that the expenditure must be one which would come within the scope of the relevant clause of section 10(2). It seems to us that there is a fundamental fallacy in the argument. What we conceive to be the real scope of the allowance contemplated by the relevant provision is that the business regarded as an entity has to take steps and incur expenditure for the purpose of protecting itself against any inroads made upon its productive capacity, ownership of assets or the like. Where two disputing claimants claim title to the business as a whole, it does not appear to us that any such dispute would involve expenditure which can be regarded as having been expended for the purpose of t