TMI Blog1980 (3) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... eposit of ex-employees constituted a receipt of a revenue nature ? 2. Whether, on the facts and circumstances of the case, the Tribunal was justified in drawing a conclusion that 50% of the expenditure incurred on the eye-camp for the benefit of the employees was not for purposes of the business of the assessee-company, thereby confirming the disallowance of Rs. 1,600 out of the total expenditure of Rs. 3,205 specially when such expenditure had been allowed in full in earlier years? 3. Whether, on the facts and circumstances of the case, the Tribunal was justified in law in drawing the conclusion from the facts of the case, that the claim of the assessee-company for deduction of Rs. 2,000 on account of pension paid to Smt. Durga Devi Khanna, a widow of an ex-employee, as deductible revenue charge incurred in the normal and regular course of the business, was merely an ex gratia payment, unconnected with the business of the assessee-company ? 4. Whether, on the facts and circumstances of the case, the Tribunal was justified in drawing the conclusion from the facts of the case that the claim of the assessee-company for deduction of Rs. 1,925 on account of pension paid to Smt. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... But in every case it is a question of fact whether the expenditure was expended wholly and exclusively for the purpose of the trade or business of the assessee." In this case, the assessee-firm was a managing agent company. In accordance with the managing agency agreement the commission for the accounting year was Rs. 3,09,114 but at the oral request of the board of directors of the managed company, the assessee agreed to accept a sum of Rs. 1,00,000 only as its commission. After taking into consideration the various circumstances, the Appellate Tribunal found that the amount was expended for financial expediency and was not given as bounty to strengthen the managed company so that if the financial position of the managed company became strong, the assessee would benefit thereby. On these facts, the order of the Tribunal allowing the deduction on the ground of commercial expediency was upheld by the Supreme Court. It is, therefore, obvious that the decision in the said case has no bearing on the facts of the present case. However, even according to this decision, it has to be shown that the expenditure was incurred wholly and exclusively for the purpose of trade and business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f profit and gain of the company. So far as the first argument is concerned, it is beyond the scope of the question referred to this court nor it arises from the order of the Tribunal. No notice of this contention, therefore, can be taken in this reference. For his other contention, the learned counsel relied on a Bench decision of the Andhra Pradesh High Court in Badri Narayan Balakishan v. CIT [1965] 57 ITR 752. The said case related to the amount of sales tax received by the assessee from the customers and credited to a separate account called the " deposit account". Obviously, this decision has no relevancy whatsoever to the present case. According to the finding of the Tribunal, the assessee had incurred expenditure on the training of the three employees which had been allowed as business expense. When part of this expense has been realised by the company by way of forfeiture of the security deposits, it was rightly held by the Tribunal that, in essence, the amounts of the security deposits resulted in the reduction of the expenditure of the company on the training of its personnel and, as such, were liable to be included in its profit and loss account. This question, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment cited of the Supreme Court in Sassoon J. David and Co. P. Ltd.'s case [1979] 118 ITR 261 noticed hereinafter. In Sassoon J. David and Co. P. Ltd.'s case, while interpreting the words, wholly and exclusively " used in s. 10(2)(xv) of the Indian I.T. Act, 1922, (equivalent to s. 37(1) of the I.T. Act, 1961), their Lordships laid down the law as under (headnote): "The expression 'wholly and exclusively' used in section 10(2)(xv) of the Income-tax Act, 1922, does not mean 'necessarily'. Ordinarily, it is for the assessee to decide whether any expenditure should be incurred in the course of his or its business. Such expenditure may be incurred voluntarily and without any necessity and if it is incurred for promoting the business and to earn profits, the assessee can claim deduction under section 10(2)(xv) of the Act even though there was no compelling necessity to incur such expenditure. The fact that somebody other than the assessee is also benefited by the expenditure should not come in the way of an expenditure being allowed by way of deduction under section 10(2)(xv) of the Act if it satisfies otherwise the tests laid down by law. The three tests laid down by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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