TMI Blog2001 (3) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... laim had initially been disallowed by the Income-tax Officer, it had been allowed in part to the extent of Rs.15,000 by the Commissioner (Appeals) who did so on the ground that effluent discharge must necessarily take place by operations which prevent its flow to the river on the banks on which the factory was situated in order that the river may not be polluted, and that such discharge had necessarily to be on lands whether or not agricultural. The expenditure incurred on such discharge was estimated by the Commissioner at Rs.15,000 and was therefore allowed. The assessee having taken up the matter in further appeal, the Tribunal had allowed the entire amount of Rs.71,151 claimed by the assessee which included the entire cost of cultivat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not as an owner of assets, even if they are the assets of the business." Reliance was placed by counsel to the case of Sassoon J. David and Co. Pvt. Ltd. v. CIT [1979] 118 ITR 261 (SC), wherein a claim for deducting the amount towards the retrenchment compensation paid to the employees of a business which was sold was allowed, as the industry that was sold continued to function after such sale, and the expenditure so incurred which resulted in the reduction of the wage bill, was one which had been incurred on the ground of commercial expediency and in order indirectly to facilitate the carrying on of its business. Such expenditure, it was held, was allowable as a deduction even if it were to be assumed that the motive behind the payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... welfare and contribution to which was voluntary, but was nevertheless required from the assessee at the time the assessee sought a permit for the movement of his goods from the State, would constitute expenditure incidental to the carrying on of the business of the assessee, and such expenditure was required to be regarded as having been motivated purely by commercial consideration. The court held that as long as the payment is made for the purpose of business, and the payment made is not by way of penalty for infraction of any law, the same would be allowable as a deduction. The fact that the expenditure which is laid out wholly and exclusively for the purposes of business need not have been essential or necessary for the business, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to the carrying on of its business and the Commissioner (Appeals) rightly took that factor into account and allowed the expenditure incurred in letting the water out and regulating its flow. As the assessee had not installed an effluent treatment plant, and had also not treated the effluents in any other manner, no deduction could be claimed as costs of effluent treatment. The Tribunal was, therefore, in error in holding that the expenditure incurred on growing crops with the aid of untreated water let out from the factory premises was expenditure, which should be regarded as business expenditure of the assessee. The first question referred to us as to whether, on the facts and in the circumstances of the case, the Appellate Tribunal w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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