TMI Blog1973 (10) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... servicing and repairs to vehicles as well as body building is done. The company has its head office at Madurai with a number of branches in various places. For the assessment year 1958-59, corresponding to the year ending December 31, 1957, the assessee returned a total income of Rs. 43,40,870. In arriving at this income the assessee claimed a deduction of a sum of Rs. 39,696 under "welfare expenses". This represented the amount spent in purchasing 6 acres 99 1/2 cents of land in Madurai in the name of the District Collector, Madurai, for the purpose of constructing houses for the company's workers by the Government under the subsidised industrial housing scheme sponsored by the State Government. The assessee claimed that this amount was an allowable deduction as a revenue expenditure under section 10(2)(xv) of the Indian Income-tax Act, 1922. Before the Income-tax Officer the assessee claimed that there was no acquisition of any capital asset on the ground that though the company paid the amount to the owners of the land, the conveyance was executed in the name of the District Collector, Madurai. It was also contended that the amount was spent to provide quarters for the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment year in question. In that view, the Tribunal held that the expenditure was wholly and exclusively incurred for the purpose of the business, that it is revenue expenditure and that it is a permissible deduction under section 10(2)(xv) of the Indian Income-tax. Act, 1922. At the instance of the Commissioner of Income-tax, the following question of law has been referred : "Whether, on the facts and in the circumstances of the case, the sum of Rs. 39,696 was a permissible deduction as a revenue expenditure incurred wholly and exclusively for the purposes of the assessee's business?" It may be noted that the revenue also requested the Tribunal to refer the following two questions : "1. Whether the Tribunal's conclusion that the expenditure was incurred wholly and exclusively for the purposes of the business is based on a reasonable view of the facts of the case? and 2. Whether the conclusion of the Tribunal that the expenditure neither resulted in acquisition of a capital asset nor in bringing in any benefit or any enduring benefit to the assessee is based on a reasonable view of the facts and circumstances of the case?" But the Tribunal considered that the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of its clerical and technical salaried staff. The amount was actually ascertained to be necessary to enable past years of service of the then existing staff to rank for pension. While holding that the sum was not an admissible deduction in arriving at the company's profits for income-tax purposes, Viscount Cave L.C. observed : "But when an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think that there is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital." The Supreme Court considered this question in detail in Assam Bengal Cement Co. Ltd. v. Commissioner of Income-tax , and the following passage in that judgment may be usefully quoted : "If the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business it is properly attributable to capital and is of the nature of capital expenditure. If on the other hand it is made not for the purpose of bringing into existence a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cquired the asset of an enduring nature. The assessee-company has thus not acquired for itself any capital asset. That leads us to a consideration as to whether the expenditure was made for acquiring or bringing into existence an advantage for the enduring benefit of the business. The Income-tax Officer and the Appellate Assistant Commissioner considered that the advantage derived by the assessee by such an expenditure was that it would result in providing accommodation for workers and keep them contented for a long period in the future. The Tribunal considered that it would be very problematic whether by merely providing accommodation for the workers the assessee will be able to keep them contented over any length of period and that in any case it would depend upon the part played by the assessee in providing accommodation for the workers. The Tribunal also pointed out that under the scheme of the Government, as seen in the press note No. 1 dated August 22, 1958, an agreement was reached between the representatives of the employers and the employees and the Government that each employer in this State employing one thousand or more workers will as a minimum programme provide hous ..... X X X X Extracts X X X X X X X X Extracts X X X X
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