Business expenditure deduction for pension and life assurance contributions allowed after plan amendment ended employer control; tax-deduction bar failed.

Employee pension and life assurance contributions became deductible as business expenditure in the assessment year 1959-60 because, after the plan rules were amended on 21 December 1957, the assessee lost control over the contributed amounts and they passed out of its dominion to the plan members. Although the contributions had been paid in earlier years, the expenditure was treated as incurred in the relevant accounting period when that control ceased. The objection based on the statutory bar relating to deduction of tax at source failed because there was a concurrent finding of fact that tax had in fact been deducted at source, and that finding was not challenged.

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Issues: Whether the assessee was entitled to deduct, as business expenditure for the assessment year 1959-60, the contributions earlier paid towards the pension and life assurance policies after the plan rules were amended, and whether the statutory bar relating to deduction at source prevented the allowance.

Analysis: The contributions were originally paid in earlier years when the assessee retained control over the moneys under the plan rules. On amendment of the rules on 21 December 1957, that control ceased and the amounts previously contributed by the assessee passed out of its dominion to the plan members. The expenditure was therefore treated as having been incurred during the accounting period relevant to the assessment year 1959-60 and was allowable as business expenditure. The objection based on the provision concerning deduction of tax at source also failed because a concurrent finding of fact had been recorded that tax had in fact been deducted at source, and that finding was never challenged.

Conclusion: The deduction was allowable to the assessee, and the statutory bar was held not to apply.

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