Void trust for employee pensions meant no business deduction for the disputed payment under income tax law.

A trust in movable property must satisfy the requirements of the Indian Trusts Act, including certainty of beneficiaries and a binding obligation in favour of them. Here, the pension deed left the grant and continuance of pensions to the bank's discretion, did not identify beneficiaries with reasonable certainty, and reserved power to alter, terminate, or redistribute the fund. On that basis, the trust was void. The payment therefore remained the bank's money in law and could not be treated as expenditure laid out wholly and exclusively for business purposes, so the deduction under section 10(2)(xv) of the Indian Income Tax Act was not allowable.

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Issues: Whether the assessee was entitled to deduction of Rs. 2,00,000 under section 10(2)(xv) of the Indian Income Tax Act on the footing that the amount had been paid under a valid and enforceable trust deed for pension payments to employees.

Analysis: A trust in movable property must satisfy the requirements of the Indian Trusts Act, including certainty as to the beneficiary. The deed did not create any binding obligation to grant pensions, left the grant and continuance of pensions to the bank's discretion, and did not identify the beneficiaries with reasonable certainty. The provisions reserving to the bank power to alter, terminate, or redistribute the fund reinforced the absence of any effective and valid trust. If the trust was void, the payment did not cease to remain the bank's money in law and could not be treated as expenditure laid out wholly and exclusively for business purposes.

Conclusion: The deduction was rightly disallowed; the trust was void and the sum of Rs. 2,00,000 was not an allowable deduction under section 10(2)(xv) of the Indian Income Tax Act.

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