TMI Blog1987 (3) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed as a deduction under section 37(1) of the Act ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in directing that the amount of Rs. 1,65,000 be allowed as a deduction from the total income as expenditure incurred wholly and exclusively for the purpose of the business carried on by the assessee ? 3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that depreciation should be allowed on the expenditure on bore wells and on payment of sales tax on a filtration plant ? " Questions Nos. 1 and 2 go together and may be considered as such. The assessee is Vazir Sultan Tobacco Co. and the assessment year concerned is 1974-7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral welfare of the employees and must be deducted as a business expenditure. The further contention urged by the Revenue that the said outlay is a capital outlay and not a revenue expenditure was also rejected by the Tribunal. Questions Nos, 1 and 2 relate to this aspect. We have seen the trust deed dated September 12, 1973. In the preamble portion it is stated that the settlor, namely, the assessee, is desirous of providing financial assistance and/or affording facilities for higher education to the meritorious and/or deserving or needy children of its employees and that in pursuance of the said desire, it has executed the said deed with a sum of Rs. 1,50,000 as the corpus. The trust is irrevocable. The object of the trust as stated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, though voluntary, i.e., not obligatory, which are ultimately designed to further the objects and purposes of the assessee can be treated as business expenditure so long as the connection between the expenditure and the object is real and not remote or illusory. In this case, there is a nexus between the expenditure and the objects and purposes of the company and it cannot be said to be illusory or remote. We are, therefore, of the view, in agreement with the Tribunal, that the said amount should be allowed as a business expenditure. We may in this connection refer to a few decisions. In Usher's Wiltshire Brewery Ltd. v. Bruce [1915] AC 433 ; 6 TC 399, a decision of the House of Lords, a brewery company, as a necessary incident of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educational facilities of the children of the employees of the assessee and hence it constituted revenue expenditure. It is unnecessary to multiply authorities on this aspect. It is for this reason only that even in cases where bonus is paid by an employer to its employees over and above the statutory bonus, the courts have allowed the same by way of deduction. There is another aspect of these two questions which has been urged before us. It is contended that the said outlay constitutes a capital out lay and not a revenue expenditure inasmuch as by creating the trust the assessee has acquired a capital asset of enduring value. Reliance for this purpose is placed on a decision of the Calcutta High Court in CIT v. India Tobacco Co. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset so created continued to belong to the assessee and was used for its benefit. But the same cannot be said in the facts of this case. Here, the asset, if any created, is one out of the control of the assessee and vested in the trustees. We are, therefore, of the opinion that the principle of the said decision does not advance the contention of the Revenue. For the Above reasons, questions Nos. 1 and 2 are answered in the affirmative, i.e., in favour of the assessee and against the Revenue. So far as the third question is concerned, it is not disputed before us by both counsel that it is concluded against the Revenue by the decisions of this court in CIT v. Warner Hindustan Ltd. [1979] 117 ITR 68 (AP) and CIT v. Warner Hindustan Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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