TMI Blog1980 (10) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... arily built for the benefit of the employees of the company and it was a business asset entitled to depreciation of Rs. 15,053 for the relevant assessment year. This contention was negatived by the ITO. The assessee went up in appeal. The AAC negatived the arguments raised on behalf of the assessee on this point with these observations: " The building of 'Ram Mandir' is neither covered under the definition of assets on which normal depreciation is allowable, as it is not used for business, nor is it covered under the special cases in which an initial depreciation at 20% is allowed under s. 32(1)(iv). The appellant has argued for the allowance of depreciation on the ground that the temple building is for the welfare of the employees and that on account of commercial expediency the same should be allowable. However, since the Act has explicitly stated the nature of buildings, which will be admissible for the purpose of depreciation under s. 32(1)(iv) and has specifically not included a temple or a place of worship, it is clear that it is not the policy of the Government to allow concession to the buildings, which are used for religious worship. It is not denied that the temple has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , be and is hereby sanctioned. RESOLVED further that the grant to the said committee be revised after one year." In terms of this resolution, an expenditure of Rs. 5,500 was incurred and this amount was claimed under s. 37 of the I.T. Act, 1961 (hereinafter referred to as " the Act "), on the ground that the said expenditure had been incurred for the benefit of the employees and was laid out or expended wholly and exclusively for the purpose of the assessee's business. This contention also did not find any favour with the authorities below. The assessee had instituted a scheme for giving gifts and prizes to its dealers by way of special " Monsoon Gift Scheme " to push up its sales. A sum of Rs. 47,539 had been spent by the assessee in connection with this scheme during the earlier assessment year ending on December 31, 1968. Since the assessee followed the mercantile system of accounting and since this amount had been spent during the relevant assessment year, the authorities below did not allow this amount to be deducted out of the taxable income of the assessee. On an application filed by the assessee under s. 256(1) of the Act, the Tribunal has referred the following th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the assessee in respect of the previous year of erection of the building; but any such sum shall not be deductible in determining the written down value for the purposes of clause (ii) of sub-section (1). " It has been argued on behalf of the assessee that " Ram Mandir " was in fact a recreation centre for its employees and the same had been constructed by the assessee in the interest of industrial peace, which in turn advanced the interests of its business. In CIT v. Malayalam Plantations Ltd. [1964] 53 ITR 140, speaking for the Supreme Court, K. Subba Rao C.J. observed as under (p. 150): The expression 'for the purpose of the business' is wider in scope than the expression 'for the purpose of earning profits'. Its range is wide; it may take in not only the day to day running of a business but also the rationalisation of its administration and modernisation of its machinery; it may include measures for the preservation of the business and for the protection of its assets and property from expropriation, coercive process or assertion of hostile title; it may also comprehend payment of statutory dues and taxes imposed as a precondition to commence or for the carrying on of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J. observed (p. 718): " That apart, when compensation is given in circumstances such as those which prevail in the present case, it would not be unreasonable to uphold the claim of the employer that the predominant motive behind the gesture was to demonstrate the interest which he took in the ultimate well-being of his employees and their dependants with the end in view of securing the loyalty and devoted services of all his employees without whose whole-hearted co-operation his business cannot possibly be carried on with efficiency and profit. Such payment would generate in the mind of other employees a sense of confidence, that these dependants would be well looked after if their life was cut short while still in service and such sense of security would motivate them to put in their best for the good of the employer. We are conscious that in the present case the resolution sanctioning the amount appears to have stated that the payment was made in recognition of the past services of the deceased employee. However, too much emphasis cannot be laid on the wording of the resolution. The resolution giving compensation to the dependants of an employee who has died in harness has no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee built a temple and installed a deity therein, the temple became the property of the deity and the amounts spent on the temple likewise came to vest in the deity. This is an entirely new case which is being set up on behalf of the revenue in these proceedings and the same cannot be allowed. Even otherwise, there is abundant evidence on the record to show that the assessee did not relinquish its title to this property. The fact that it has claimed depreciation for the building itself shows that it treated the building as belonging to it and there had never been any intention on its part to vest the title of the building in the deity. For the reasons aforementioned, we answer the first question in the negative, i.e., in favour of the assessee and against the revenue. Since the amount of Rs. 5,500 was in the nature of a periodic grant for the item covered by the first question, we also answer the second question in the negative, i.e., in favour of the assessee and against the revenue. The third question offers no difficulty. Admittedly, the assessee had adopted the mercantile system of accountancy and the amount in question had been spent in the earlier assessment year. Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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