TMI Blog1995 (8) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment years 1974-75 to 1976-77. Tax Cases Nos. 961 to 963 of 1984 have been preferred by the assessee in respect of the same assessment years 1974-75 to 1976-77. The only question of law referred to this court in Tax Case No. 226 of 1986 filed by the Revenue is similar to the second question referred to this court in Tax Cases Nos. 961 to 963 of 1984, filed by the assessee. The abovesaid sole question in Tax Case No. 226 of 1986 runs as follows : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the interest payable on the compensation due to the former owners of the transport undertaking which had been nationalised and vested with the assessee-corporation should be allowed as a revenue expenditure ?" The abovesaid similar question in Tax Cases Nos. 961 to 963 of 1984 runs as follows : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the interest of Rs. 1,39,910 for the assessment year 1974-75 and Rs. 1,49,379 for each of the assessment years 1975-76 and 1976-77 payable to the private bus operators from whom the buses were taken over, is not an ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both counsel are agreed that the said question has to be answered in the negative and against the assessee, in view of the order of this court dated December 22, 1994 in Tax Cases Nos. 630 to 635 of 1982 (Anna Transport Corporation Ltd. v. CIT [1995] 215 ITR 800 (Mad)). Accordingly, the said question is answered. In so far as the second of the abovesaid two questions also, both counsel are agreed that the said question has to be answered in the affirmative and against the Revenue, applying the principles laid do wn by the Supreme Court in CIT v. Associated Cement Companies Ltd. [1988] 172 ITR 257 and CIT v. T. V. Sundaram Iyengar and Sons Pvt. Ltd. [1990] 186 ITR 276. Accordingly, the said second question is answered. Now, coming back to the first question in Tax Cases Nos. 961 to 963 of 1984, it is as follows : "Whether, on the facts, and in the circumstances of the case, the Tribunal was right in law in holding that the amounts Rs. 5,000 for 1974-75 and Rs. 7,500 for each of the assessment years 1975-76 and 1976-77 paid towards Flag Day Fund and Rs. 1 lakh and Rs. 3,87,476 for the assessment years 1975-76 and 1976-77, respectively, towards Chief Minister's Rehabilitation Fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... butions were made, showed that the contributions to the above said welfare fund was a pre-condition for the grant of the abovesaid export permits. In such a context, the Andhra Pradesh High Court held that those contributions were opposed to public policy, being in the nature of unlawful consideration for discharging an official duty, otherwise than according to law, that is, otherwise than on the merits. The relevant observations therein are as follows (at page 405) : ". . . since the contribution is a pre-condition, he feels obliged to comply with the same, because he thinks, and rightly, that there is no other way of obtaining the permit and to carry on his business. This is not different from paying bribes--the difference, if any, may only be one of degree. It is true that, from the point of view of the assessee, such a payment is warranted by his business expediency ; but, we are not prepared to agree with Mr. Anjaneyulu that every payment which is expedient in the interests of the assessee's business must be deducted under section 37. Any payment which is either opposed to any law, or is opposed to public policy, cannot be recognized, because it is well settled that infrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r considered in the said decision ... We are, therefore, unable to see the relevance of the said decision on the question referred to us. " We may also add that in Southern and Rajamani Transports (P.) Ltd. v. CIT [1977] 107 ITR 470 (Mad) also, the abovesaid public polity aspect was not considered, though the donation made by the assessee therein was to a political party and what was held therein was only that there was no nexus or link between the donation and the business carried on by the assessee and hence it was disallowed. Likewise in Goodlas Nerolac Paints Ltd. v. CIT [1982] 137 ITR 58 (Bom) also, the aspect of public policy was not considered, even though it was a case of payment by the assessee, of "secret commissions." In the light of the abovesaid decisions, let us now see the facts found in the present case, which could be seen from the relevant observations of the first appellate authority, viz., the Commissioner of Income-tax (Appeals). In relation to the abovesaid contribution to the Chief Minister's Drought Relief Fund, the observations are as follows : "In response to an appeal for contribution to the Chief Minister's Drought Relief Fund, the Tamil Nadu Bus O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctually opposed to public policy. Therefore, our view in the present case is that, certain relevant factual features, which were present in CIT v. Kodandarama and Co. [1983] 144 ITR 395 (AP) are not present in the present case and hence CIT v. Kodandarama and Co. [1983] 144 ITR 395 (AP) is not applicable to the present case. Therefore, there is strictly no necessity to assess the correctness of the said decision. However, we may incidentally add that the Supreme Court, while dealing with a business loss as distinguished from a business expenditure has laid down, approving the earlier decisions, including that of the Orissa High Court in CIT v. Industry and Commerce Enterprises (P.) Ltd. [1979] 118 ITR 606 that where Government bonds, as securities, were purchased by the assessee with a view to increase his business with the Government or with the object of retaining the goodwill of the authorities for the purpose of his business, the loss incurred on the sale of such bonds or securities was allowable as business loss. In that case, according to the statement of case drawn up, the assessee was told that if it subscribed for the Government bonds, preferential treatment would be gra ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
