Law: Income Tax Act, 1922

Section: 10,10(2)(xvi)

[Indian Income Tax Act, 1922 (XI of 1922)]........Section 10(2)(xvi)- Business expenditure-Contribution by assesses-company to managed company an its Golden Jubilee-Contribution not earmarked for any particular business purpose-Amount utilised for construction of canteen for workers-No enduring benefit to assessee-Tribunal finding that expenditure was made for earning more commission Whether allowable as business expenditure-Held yes t B. Business or revenue expenditure-Question of fact or law-Tribunals finding that the expenditure laid out was wholly and exclusive for the purpose of business-Finding based on evidence Whether a question of fact--Held yes C. Indian Income Tax Act, 1922 (XI of 1922)"Section 49D-Double taxation relief-Income arising outside taxable territories-Dividend-Tax deducted-No provision for relief" from double taxation -Whether relief permissible under Section 491)-Held yes On the occasion of the Golden Jubilee celebrations of the managed mills, the assessee-company, which was acting as its managing agents, contributed a sum of Rs. 1,00,000 to the managed mills without earmarking the contribution for any particular business purpose. The amount was utilised by the managed mills for construction of a canteen for its workers. The claim of the assessee-company for deduction of the amount under Section 10(2)(xv) of the Indian Income Tax Act, 1922, was rejected by the Income Tax Officer on the ground that it was not expenditure incurred by the assessee-company as claimed by it on welfare amenities for the workers and the expenditure was of a capital nature. The Appellate Assistant Commission of upheld the order of the Income Tax Officer. The Tribunal held that the contribution made by the assessee-company to the managed mills was made wholly and exclusively keeping in View the business interests of the assessee-company, the amount contributed was reasonable and, inasmuch as the assessee-company did not contribute that amount for a specific purpose, it was immaterial in what manner the managed mills had spent the same. The Tribunal further held that the expenditure did not bring into existence any asset in favour of the assessee-company, it was…

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