Pension to widow of former chairman was not deductible without contractual obligation or employer-employee nexus

A pension paid by a company to the widow of its former chairman was held not deductible in computing business income because it arose from a board resolution alone and not from any contractual obligation or employer-employee relationship. The court treated the facts as comparable to an earlier decision and followed that precedent. As the deceased chairman was not an employee and the payment lacked the necessary business nexus, the deduction claim failed.

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Issues: Whether the pension paid by the assessee-company to the widow of its former chairman was allowable as a deduction in computing the company's income.

Analysis: The payment was made pursuant to a board resolution in recognition of the services rendered by the deceased chairman, but there was no agreement for pension and no employment relationship on which the claim could rest. The facts were treated as similar to an earlier decision of the same court, and that decision was followed.

Conclusion: The deduction was not allowable. The question was answered in the affirmative and against the assessee.

Ratio Decidendi: A pension paid to the widow of a non-employee, absent any contractual obligation or employer-employee nexus, is not deductible in computing business income.

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