1985 (10) TMI 4

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.... allowed by the Appellate Assistant Commissioner was a business expenditure incurred by the assessee in the relevant previous year and in allowing the same as a deductible expenditure ? " The assessee, who is the respondent before us, carries on business as electrical engineers and contractors with its head office in Calcutta and branches in different parts of the country. The assessee put into effect pension and life assurance plan for its European employees in about the year 1948. Pursuant to the plan, it took out policies with the Scottish Widows' Fund and Life Assurance Society in the name of those employees. Under the plan, rules were framed and the assessee paid its part of the contribution to the premium in respect of the policies t....

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....made by the assessee to secure that tax would be deducted at source from the amounts paid finally to the employees by the society in terms of the policies. The Income-tax Appellate Tribunal allowed in part the second appeal preferred by the assessee, holding that all the contributions made in the relevant year by the assessee to the premium on the life policies of the plan members were not allowable as deductions in the hands of the assessee, and what was allowable were the contributions made by the assessee to the policies of such employees who had actually been paid pensionary and retirement benefits by the society. After completing the assessment for the year 1956-57, the Income-tax Officer reopened the assessments of the assessee for t....

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....of the claim respecting contributions made in earlier years. Before the Appellate Assistant Commissioner, a statement was filed by the assessee showing the total contribution made by the assessee to the pension fund and the payment made by the society in the assessment years 1959-60 and 1960-61 amounting to pounds 8,932-7-9 and pounds 3,315-8-3. The Appellate Assistant Commissioner allowed these amounts only and rejected the remaining claim. The assessee filed second appeal before the Income-tax Appellate Tribunal and restricted the claim to the amount that stood disallowed out of Rs. 2,09,920.88 after deducting therefrom the equivalent of the two sterling payments. The assessee contended that on amendment of the rules, the amount represent....

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....contributions to the premium in the earlier years. But they were made at a time when the rules permitted the assessee to receive, back the amounts contributed by it under the plan. According to the construction put on the rules, it was deemed that the assessee continued to retain its hold on those amounts. It cannot be said then that when those payments were made, they could be regarded as expenditure laid out or expended within the terms of clause (xv) of sub-section (2) of section 10 of the Act. The control over the moneys passed on December 21, 1957, when pursuant to a resolution by the board of directors, the rules were revised and amended. On that day, payments made earlier over which, under the original rules, the assessee had maintai....