9911796707
TMI Blog1973 (4) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... remuneration paid by the company to the said Chockalingam Chettiar as general manager for the years ending March 31, 1960, March 31, 1961, and March 31, 1962, relevant for the assessment years 1960-61, 1961-62 and 1962-63 were Rs. 14,706, Rs. 31,875 and Rs. 31,875, respectively. His salary as secretary up to October 30, 1959, was included in the remuneration of the managing agents. The assessee-company claimed the above amounts paid as remuneration to the said general manager after November 1, 1959, as expenditure coming under section 10(2)(xv) of the Indian Income-tax Act, 1922 (hereinafter referred to as " the Act "), corresponding to section 37 of the new Act. The Income-tax Officer, however, disallowed the same holding that it was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , relevant for the assessment years 1960-61, 1961-62 and, 1962-63, were admissible expenditure under the Income-tax Act, 1961 ? " It is contended on behalf of the revenue that the payment was in contravention of the provisions in section 360 of the Indian Companies Act and, therefore, the payments cannot be allowed as a deduction. It is also contended that the question of allowability has to depend upon whether the payments were legal, and, therefore, the provisions of the Companies Act stand automatically attracted in the application of section 10(2)(xv). It is not disputed that the said Chockalingam Chettiar was an associate of the managing agents, that his appointment should be in accordance with section 360 of the Companies Act, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a trustee for the amount received by him and, therefore, it cannot be said to be an outgoing, and that unless it is an outgoing or a payment out it cannot be claimed as a deduction. It refers to the decision in Indian Molasses Co. v. Commissioner of Income-tax to show as to how the word " expenditure " occurring in section 10(2)(xv) is to be construed. In that case it was observed : " ' Expenditure ' is equal to ' expense ' and ' expense is money laid out by calculation and intention though in many uses of the word this element may not be present, as when we speak of a joke at another's expense. But the idea of ' spending ' in the sense of ' paying out or away ' money is the primary meaning and it is with that meaning that we are concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Act is a self-contained code, that the allowability of a deduction under section 10(2)(xv) has to be considered only in the light of the provisions of the Income-tax Act, and that it is not possible to travel outside the provisions of that Act and deny the benefit of that section, on the ground that the payment is unauthorised or has been prohibited by some other statute. In view of the said decision even though there is an infringement of section 360 of the Companies Act in this case, still there being admittedly an actual payment for the actual services rendered by Chockalingam Chettiar as general manager, the amounts paid will be an allowable deduction under section 10(2)(xv). The amount has really been paid out by the company to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
