TMI Blog1970 (8) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... y policy to secure an annuity of pound 720 per annum payable to Harvey for life 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 computation of its taxable income Rs. 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. In the subsequent years of assessment the company claimed allowance of the annual payment of Rs. 4,364. The Income-tax Officer disallowed the claim. The company disputed the decision and carried it to the Income-tax Appellate Tribunal. 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 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". The High Court answered the question in the negative. The view taken by the High Court was confirmed by this co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : " (1) Whether, on the facts and in the circumstances of the case, the sum of Rs. 1,83,434 was an expenditure effectively laid out or expended during the accounting year 1955 within the meaning of section 10(2)(xv) of the Income-tax Act ? (2) If the answer to question No. (1) is in the affirmative, then whether the said expenditure of Rs.1,83,434 represented a revenue expenditure ?" The High Court of Calcutta recorded answers in the affirmative on both the questions. With certificate granted by the High Court under section 66A(2) of the Indian Income-tax Act, 1922, this appeal is preferred by the Commissioner of Income-tax. Answer recorded by the High Court on the first question was, in our judgment, correct. This court had in the earlier decision, Indian Molasses Co. (Private) Ltd. v. Commissioner of Income-tax, held that the company had not parted with control over the amounts set apart between the years 1948 and 1954 for securing the pension benefit to Harvey, and on that account no amount was appropriated to make it expenditure within the meaning of section 10(2)(xv) of the Act when Harvey died. At the date when different sums of money were set apart there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imate business needs of the company and the benefit derived by or accruing to it therefrom. Explanation.-- The provisions of this sub-section shall apply notwithstanding that any amount disallowed under this sub-section is included in the total income of any person referred to in clause (a)." An amount proved to be expended by a taxpayer carrying on business is (subject to sub-section (4A) of section 10) a permissible allowance in the computation of taxable income of the business, if it be established that the allowance claimed is (a) expenditure which is not of the nature described in clauses (i) to (xiv) of section 10(2) ; (b) that it is hot of the nature of capital expenditure or personal expenses of the assessee ; and (c) that the expenditure was laid out or expended wholly and exclusively for the purpose of such business, profession or vocation. The expenditure incurred by the company is not allowance of the nature described in any of the clauses (i) to (xiv) inclusive of section 10(2), nor is it of the nature of capital expenditure or personal expenses of the assessee. In our judgment, the argument advanced before the High Court that the expenditure resulting from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the application of section 10(2)(xv) were not satisfied, the allowance was not admissible", the Commissioner was incompetent to urge that plea before the High Court. In support of that view they relied upon the judgment of this court in Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. The High Court observed that before the Tribunal the plea that the expenditure was not laid out or expended wholly and exclusively for the purpose of the business of the company was not argued, and since the question raised and referred "was not wide enough to include that submission", the Commissioner could not urge it before them. We are unable to hold that the decision in Scindia Steam Navigation Co. Ltd.'s case supports the opinion of the High Court. The plea that the amount claimed to have been expended was not admissible as an allowance was raised by the department. The Appellate Assistant Commissioner had decided in favour of the department and the order was sought to be supported before the Tribunal by the departmental representative. Granting that an aspect of the question was not argued before the Tribunal, the question was on that account not one which did not arise out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it therein. The court in that case held that the question as framed was comprehensive enough to cover the question of the applicability of the fourth proviso to section 10(2)(vii) of the Income-tax Act. Venkatarama Aiyar J. observed at page 612 : " Section 66(1) speaks of a question of law that arises out of the order of the Tribunal. Now a question of law might be a simple one, having its impact at one point, or it may be a complex one, trenching over an area with approaches leading to different points therein. Such a question might involve more than one aspect, requiring to be tackled from different stand-points. All that section 66(1) requires is that the question of law which is referred to the court for decision and which the court is to decide must be the question which was in issue before the Tribunal. Where the question itself was under issue, there is no further limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal. It will be an over-refinement of the position to hold that each aspect of a question is itself a distinct question for the purpose of section 66(1) of the Act." Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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