Law: Income Tax Act, 1922

Section: 10

[Indian income-tax Act 1922 (XI of 1922)]........Section-10 income Deduction-State Transport Corporation-Contributions out of revenue to third party liability fund- Whether deductible in computing income-Held yes. On the question whether contributions by the Bombay State Road Transport Corporation to the insurance fund under rule 11 of the Bombay State Transport Corporation Rules, 1952, framed under S, 44 of the Road Transport Corporations Act, 1950, which provides as follows : "Third party liability fund.-There shall be established and maintained by the Corporation a Fund to be called Party Liability Fund into which shall paid every year from and out of the revenues of the Corporation such as may be directed by the State Government from time to time for meeting any liabilty, aristing out of the use of any vehicle of the Corpora ion, which the Corporation or any person in the employment of the Corporation may incur to third parties" are admissible as deductions in computing its income : Held, that the contributions are made under at legal obligation cast upon it under a statutory rule and will have to he allowed as a deduction in computing its profits. Moreover, such payments are made from and out of the revenue of the Corporation AMALGAMATBD ELECTRICITY Co. LTD. v. C1T (1974) 97 ITR 334 (Bom) applied. CIT v. JAIPURAIA CH1NA CLAY Mines (P.) LTD. (1966) 59 ITR 555 (SG). JUDGMENT (The judgment of the court was delivered by TULZAPURKAR. J.)-Two questions have been referred to us by the Tribunal under section 66(1) of the Indian Income-tax Act, 1922, for our determination at the instance of the Commissioner of Income-tax, Bombay City III, Bombay, and those questions run as follows : "(1) Whether, on the…

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