TMI Blog2002 (12) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... to establish welfare trusts for the employees in the year in which the firm earned huge profits was a prudent commercial decision to strengthen the bonds between the employer and the employees – thus deduction is allowable - - - - - Dated:- 18-12-2002 - Judge(s) : S. H. KAPADIA., J. P. DEVADHAR. JUDGMENT The judgment of the court was delivered by J.P. DEVADHAR J.-The question of law relating to the assessment year 1978-79 referred to this court at the instance of the Revenue, under section 256(1) of the Income-tax Act, 1961, is as follows: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the contribution of Rs. 12,03,000 to the three welfare trusts created by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Income-tax Act. The assessee being aggrieved by the order of the Income-tax Officer went in appeal before the Commissioner of Income-tax (Appeals) who differed from the view taken by the Income-tax Officer and held that the claim was admissible as deduction under section 37 of the Income-tax Act. Being aggrieved by the aforesaid order, the Revenue filed an appeal before the Income-tax Appellate Tribunal. The Tribunal agreed with the view taken by the Commissioner of Income-tax (Appeals) and held that the contribution given to the trusts is an admissible deduction. Hence, this reference at the instance of the Revenue. Mr. R.V. Desai, learned senior counsel appearing on behalf of the Revenue, contended that in the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... establish and maintain hospitals, nursing homes, dispensaries, sanatorium for the benefit of the employees, special medical treatment to the physically handicapped and mentally retarded children of the employees, to provide quality food, food stuff, food grains, provision, grocery, clothing, etc., on no profit no loss basis, to the employees, and for that purpose to establish, maintain and conduct canteens, fair price shops, etc., on a no profit no loss basis. The contributions to these funds being made as a welfare measure towards the employees, the same were allowable as revenue expenditure. Mr. Inamdar further submitted that under clause 50 of the trust deed, the trust was to remain irrevocable for all time and the assessee had releas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na fide created for the welfare of the employees of the assessee-firm. It is the case of the assessee-firm that it is carrying on the business of construction and structural engineers for several years and in the course of carrying out the business, the assessee has employed several persons as employees, who have given their unstinted and devoted services to the employer assessee and with a view to obtain the same kind of services from its employees, and in order to maintain and improve better employer and employee relationship the assessee has created these trusts. The health of a firm or a company depends upon the healthy relationship between the employer and the employees. In a year in which the firm has earned huge profits, if the firm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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