1959 (5) TMI 5 - SC - Income Tax

Whether on the facts and in the circumstances of the case, and on a true construction of the trust deed, dated 16th September, 1948, and the policy dated the 13th January, 1949, the payments made by the assessee company and referred to in paragraph 4 above constitute 'expenditure' within the meaning of that word in section 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 conditions mentioned in that clause being satisfied ?

Held that:- In our opinion, the payment was not merely contingent but the liability itself was also contingent. Expenditure which is deductible for income-tax purposes is one which is towards a liability actually existing at the time, but the putting aside of money which may become expenditure on the happening of an event is not expenditure. In the present case, nothing more was done in the account years. The money was placed in the hands of trustees and/or the insurance company to purchase annuities of different kinds, if required, but to be returned if the annuities were not bought and the setting apart of the money was not a paying out or away of these sums irretrievably.

High Court correctly answered the question in negative. Appeal dismissed.