TaxTMI 
TaxTMI 
1980 (1) TMI 18
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.... allowed under section 28 of the Income-tax Act, 1961, for the assessment years 1964-65, 1965-66, 1966-67 and 1967-68 ?" The assessee carries on business in the manufacture and sale of cycles and cycle parts. In the returns filed for the years under consideration, the assessee deducted the contributions made by it to the superannuation fund, life insurance fund and Tube Investments Educational Policy Fund of M/s. Tube Investments Ltd., Birmingham, to the credit of the employees who were serving it in the relevant years. For instance, taking the assessment year 1965-66, the assessee had the benefit of the services of one Mr. Tracy and the amount paid on his account to the respective funds mentioned above came to Rs. 4,395. For the subsequ....
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....se may be; ...... " The case of Carborundum Universal Ltd. referred to by the Tribunal in its order came up on reference to this court and the decision of this court is reported in CIT v. Carborundum Universal Ltd. [1977] 110 ITR 621. In that case also, the amount had been paid in respect of a person by name Jackson who worked as the general works manager in the factory of that company. In that case, the agreement with the foreign company was also annexed to the statement of the case and this court considered the allowability of the expenditure in the context of s. 36(1)(iv) and s. 28. At page 629 of the report, after referring to the decision in Badridas Daga v. CIT [1958] 34 ITR 10 (SC) and to a passage at p. 15 of the said report, it ....
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....for arriving at the profits and gains of the assessee's business in the present case. " The learned counsel for the Commissioner contended that the answer rendered in that reference would squarely apply to the present case. Learned counsel for the assessee, however, contended that Mr. Tracy and other persons, in respect of whom payments to the superannuation fund were made, were not the assessee's employees, that they were persons whose services were merely lent to the assessee under the collaboration agreement which was approved by the Govt. of India and that in such case, there was absolutely no scope for the application of s. 36(1)(iv). He, therefore, submitted that the decision in the case of Carborundum Universal Ltd. [1977] 110 ITR....
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....le of being recognised on account of its being a foreign fund, it would be outside the scope of s. 36(1)(iv) and the claim for deduction of the amount paid to such a fund could be considered under other provisions. In view of this difference in approach, we would follow the decision of this court. However, in the present case, the case of the assessee that Mr. Tracy and others were not its employees had not been gone into by the AAC and by the Tribunal. It is not clear, according to Mr. Jayaraman, whether the assessee raised this point that Mr. Tracy and others were not its employees. Apparently because the AAC and the Tribunal were inclined to accept the assessee's claim, the assessee had no opportunity to put forward the entire case be....