Law: Income Tax Act, 1922

Section:

(a) Income-tax-- Business expenditure ---Contribution to death relief fund ---Contribution by assessee to employees housing society for construction of roads ---Labour welfare measure --Allowable as revenue expenditure. The assessee made a contribution to the Death Relief Fund, as the employer's contribution to match the contribution made by the workmen to the said fund, in accordance with an agreement with its employees, dated May 14, 1976. It also made a contribution to the employees housing society for construction of roads. These were disallowed by the Assessing Officer but were allowed by the Commissioner of Income­tax (Appeals), whose decision was upheld by the Appellate Tribunal. On a reference : Held, (i) that an industry cannot function efficiently, if it cannot maintain a work force which is reasonably content and for whose welfare the employer evinces concern. Death is inevitable, and the steps taken by the employer in this case, which were only minimal, to alleviate the suffering of the family immediately after the death, was clearly an expenditure, which was warranted. It is not necessary that every item of expenditure incurred by the assessee should have been incurred as consequence of a statutory obligation, before it can qualify as a legitimate item of expenditure for the purpose of computation of income. Hence, the contribution made by the assessee to the Death Relief Fund was a legitimate item of expenditure of revenues character. (ii) that the contribution made by the assessee to the employees housing society for construction of roads, was an item of welfare expenditure which was legitimate and had rightly been allowed by the Tribunal. CIT v. T.V. Sundaram Iyengar and Sons (P.) Ltd. (1990) 186 ITR 276 (SC) fol. Income-tax----- -----Depreciation---- Higher rate of depreciation allowance for machinery that with corrosive chemicals claimed---Matter remanded to Appellate. On the question of the assessee's claim for depreciation at a higher rate, the High Court directed the Tribunal to verify as to whether the chemicals used in the manufacture of sugar are corrosive, and whether the items of machinery, if any, came into contact with the corrosive…

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