Harvey died in May 1955 before he was due to retire and in the return of its taxable income for the assessment year 1956 57 the Company claimed that Rs.
1,83,434/ represented a revenue expenditure ?
To recall, the Income tax Officer recorded numberreasons for, disallowing the expenditure.
The view taken by the High Court was companyfirmed by this Court in appeal Indian Molasses Co. P Ltd. v. Commissioner of Income tax, West Bengal 1 .
Appeal from the judgment and order dated March 16, 1966 of the Calcutta High Court in Income Tax Reference No.
K. Sen, T. A. Ramachandran and D. N. Gupta, for the respondent.
The Judgment of the Court was delivered by Shah, J. The respondent Company appointed one Harvey its Managing Director.
1,83,434/ being the total amount paid by the Company to the trustees in terms of the original trust deed dated September I 6, 1 94 8 and the supplementary deed dated October 29, 1954, be allowed as a permissible expenditure in the companyputation of the Companys business profits in the previous year ending December 31, 1955.
from the date he attained the age of 55 years, and in the event of his death before that date an annuity of pound 611.12 annually to his widow.
In its return for the assessment year 1949 50 the Company claimed that in the companyputation of its taxable income Rs.
1,83,434/ was effectively disbursed during the accounting year and was on that account an admissible allowance in the companyputation of the Companys business profits.
47,607/ to enable the trustees to take out an annuity policy in the names of the trustees in favour of Harvey 1 37 I. T. R. 66, and his wife to companyer the enhanced pension.
The Company disputed the decision and carried it to the Income tax Appellate Tribunal.
The Income tax Appellate Tribunal in appeal reversed the order and allowed the claim of the Company holding that the amount of Rs.
The Income tax Officer disallowed the claim without assigning any reasons.
1,83,434/ was an expenditure effectively laid out or expended during the accounting year 1955 within the meaning of s. 10 2 xv of the Income tax Act ?
Under the terms of agreement, Harvey was to retire on attaining the age of 55 years.
the funds numberexpenditure within the meaning of s. 10 2 xv of the Indian Income tax Act, 1922, may be deemed incurred.
In the subsequent years of assessment the Company claimed allowance of the annual payment of Rs.
The terms of the original trust deed were made applicable to the supplementary deed.
The Income tax Officer disallowed the claim.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
The respondent Company set apart in 1948 Rs.
The Tribunal submitted a statement of case to the High Court of Calcutta on the question whether the payments .constituted expenditure within the meaning of that word in S. 10 2 xv of the Indian Income tax Act, 1922, in respect of which a claim for deduction can be made subject to the other companyditions mentioned in that clause being satisfied.
The Company arranged to provide a pension to Harvey on retirement, and executed a deed of trust on September 16, 1948 appointing three trustees to carry out that object.
4,364/ , and delivered the various amounts to the trustees who were authorised to take out a deferred annuity policy to secure an annuity of pound 720 per annum payable to Harvey for life.
1,09,643/ paid in 1948 to the trustees under the deed of trust were allowable as an amount wholly and exclusively,expended for the purpose of its business.
The High Court answered the question in the negative.
During the pendency of those proceedings the Company ar ranged to give an enhanced pension to Harvey and executed a supplementary deed of trust on October 29, 1954 and set apart an additional sum of Rs.
4,364/ .
G. C. Sharma, R. N. Sachthey and B. D. Sharma, for the appellant.
76 of 1962.
C. Manchanda.
1,09,643/ and in each of the six subsequent years Rs.
2555 of 1966.
On this part of the case there is numberdiscussion in the orders of the taxing authorities and the Tribunal.
In appeal the Appellate Assistant Commissioner companyfirmed the order observing that the amount paid long before the companymencement of the previous year were number admissible under s. 10 2 xv of the Income tax Act, 1922.
The Appellate Assistant Commissioner disallowed it on the, ground that it was number debited in the profit and loss account of the Company in the previous year.
