TMI Blog1965 (7) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... r, on the facts and in the circumstances, the following gratuity payments made by the applicant-company are allowable : (a) Gratuity of ₹ 15,000 paid to the widow of a superintendent who died while in the service of the applicant; (b) Gratuity of ₹ 500 paid to a superintendent on termination of his employment with the applicant-company ? 2. Mr. Hartly, whose widow was paid ₹ 15,000, was, it is admitted, a superintendent of the assessee's estate for a number of years. He died in harness and his widow was given the sum of ₹ 15,000, calculated at the rate of half-a-month's salary for every year of Mr. Hartly's service. 3. Section 5 of the Agricultural Income-tax Act, 1950, provides that the agri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y expended on the ground of commercial expediency and in order indirectly to facilitate the carrying on of the business ? 6. It is not contended that the payment was made as a matter of practice or that it affected the quantum of the salary that was being paid to Mr. Hartly or that Mr. Hartly had any reason to entertain an expectation that such a payment would be made. The submission on behalf of the assessee is that the payment was made in order to demonstrate the interest that the company takes in its employees and their dependents, and to ensure by such a demonstration the loyalty and devoted service of the current and future employees without whose unstinted co-operation the company could not possibly carry on its business with pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Philips. There was no practice in the appellant-company to pay such amounts and it did not affect the quantum of salary of the recipient. 8. Section 10(2)(xv ) of the Indian Income-tax Act, 1922, corresponds to section 5(j) of the Agricultural Income-tax Act, 1950. 9. In this case also there is nothing on record to show that there was any connection between the purpose of the payment and the future conduct of the business of the assessee. The resolution sanctioning the payment might have given a clue ; but that resolution is not before us. In these circumstances all that we can do is to conclude that the payment was an ex gratia payment, a mere gift to Mrs. Hartly on her husband's death in harness after many years of faithful se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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