TMI Blog1967 (7) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 10(2)(xv) of the Indian Income-tax Act, 1922 ? " The material facts of the case are these : Messrs. Meattles Limited, Delhi, is a private limited company. Shri B. D. Meattle, the governing director of the company, owns practically all the shares. In reality, it is a one-man concern, as held by the Income-tax Appellate Tribunal. The board of directors of the company, by means of a resolution dated October 29, 1954, resolved as under : " The Board think it expedient and in the best interest of the company that Shri B. D. Meattle, the governing director of the company, be insured as provided in article 44 of the memorandum of association of the company, both for life and accident to the extent of Rs. 10 lakhs each, and the premium be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing for the purpose of the business. It is not enough that the expenditure is merely connected with the trade ; it must be really incidental to the trade itself. In order to ascertain whether the expenditure has been incurred wholly or exclusively for the purpose of the business, one must look to the direct concern and direct purpose for which the money is laid out and not to the remoter or indirect results, which may possibly motivate or flow from the expenditure. Before the deduction claimed can be allowed, there must be satisfaction that the expenditure in question is wholly and exclusively laid out or expended for the purpose of the business in question. As mentioned earlier, we are unable to find any direct nexus between the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ductible under section 10(2)(xv), the learned counsel for the assessee invited our attention to certain decisions of the English courts. We shall now refer to them. The first decision read to us is that of the Court of Appeal in Inland Revenue Commissioners v. D. H. Williams' Executors. There a limited company took out a policy of insurance in the sum of pound 15,000 for the benefit of the company, to cover the loss ensuing on the death or injury by accident of a director, whose special qualifications and experience were of value to the company. The director was killed by accident, and the sum assured was paid to the company, which distributed it among the shareholders. The question for decision was whether the receipt in question was a cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principle of law enunciated in Williams' Executors' case, already referred to. That decision is also of no assistance for our present purpose. Lastly, our attention was invited to the decision of the Supreme Court in Commissioner of Income-tax v. Royal Calcutta Turf Club. Therein, the Supreme Court laid down that " any expenditure which was incurred for preventing the extinction of the assessee's business would be expenditure wholly and exclusively laid out for the purpose of the business of the assessee and would be an allowable deduction. " We do not think that the ratio of that decision bears on the point under consideration. For the reasons mentioned above, we answer the question referred to us in favour of the department. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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