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2018 (4) TMI 746

e expression 'Dying in harness'. The Assessing Officer has confused this expression with that of 'Dying in the course of employment'. The Assessing Officer should have known that 'Died in Harness' would mean that a person dies while he was in service and does not mean that while on duty. This erroneous interpretation has led to an erroneous Assessment Order. Unfortunately, the CIT (A) also did not take note of the factual position that a resolution was passed by the Respondent Board and came to the conclusion that the payment given to the widow of Mr.K.R.Sundaram is purely discretionary and not a pension. - There is a resolution, which has been passed by the Board of the Assessee company recognizing the service rendered by Mr.K.R.Sunda .....

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t. 2. This appeal by the Revenue is directed against the order passed by the Income Tax Appellate Tribunal in I.T.A.No. ITA No.2322/mds/2006 dated 31.12.2007 relevant to the Assessment Year 2003-04. 3. This appeal has been admitted on the following substantial question of law: Whether on the facts and circumstances of the case, the Tribunal was right in holding that the amount of ₹ 50,000/- per month paid to the widow of the Managing Director of the company, who passed away is allowed as a deduction 4.The facts leading to the filing of the appeal are as follows: The respondent Assessee was established during the year 1970 and at the time of inception one Mr.K.R.Sundaram joined the respondent Assessee as General Sales Manager, he was p .....

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rough the order passed by the Assessing Officer and we find that the Assessing Officer failed to understand the meaning of the expression 'Dying in harness'. The Assessing Officer has confused this expression with that of 'Dying in the course of employment'. The Assessing Officer should have known that 'Died in Harness' would mean that a person dies while he was in service and does not mean that while on duty. This erroneous interpretation has led to an erroneous Assessment Order. Unfortunately, the CIT (A) also did not take note of the factual position that a resolution was passed by the Respondent Board and came to the conclusion that the payment given to the widow of Mr.K.R.Sundaram is purely discretionary and not .....

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e resolution by the assessee authorizing the payment of family pension would establish that the assessee has taken care of the well-being of the employees and their dependents which, in turn, would ensure full and active co-operation of the employees in he smooth running of the business. The resolution would generate in the minds of the employees goodwill towards the assessee and would promote good relationship between the employer and employees. We are of the view that the payment was made on the ground of commercial expediency. 10. Considering the development in law in the payment of family pension, the Gujarat High Court in CIT Vs. Laxmi Cement Distributors (P) Ltd., (1976) 104 ITR 711 (Guj) held as follows (headnote): The payment of fam .....

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y in holding that the payment made to Mrs.Ghaswala is an allowable deduction under s.37 of the Act. We have already seen that two of the tests laid down by the Supreme Court in Gordon Woodroffe Leather Mfg. Co Vs. CIT (supra), are fully satisfied on the facts of the case. The resolution authorizing the payment of pension shows an expectation on the part of the employee of getting the pension. Further the pension was made out of commercial consideration and in order to facilitate the carrying on the business smoothly. It is well-settled that the tests laid down by the Supreme Court are independent and alternative and on satisfaction of any one test, the payment can be treated as a permissible deduction. 6. In the case on hand also, there is .....

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