'959

May 5.

SUPREME COURT REPORTS [1959] Supp.

THE INDIAN MOLASSES CO. (PRIVATE) LTD. v.

THE COMMISSIONER OF INCOME-TAX, WEST

BENGAL. (B. P. SINHA, J. L. KAPUR and

M. HIDAYATULLAH, JJ.)

Income-tax-Deduction - Business expendit11re-Payment of sums for getting annuities to provide pension-Liability depending on contingency-Expenditure, meaning of-Indian Income-tax Act, z922 (XI of z922), s. Io(2)(xv).

With a view to provide a pension to H who was the managing director of the appellant company, after his retirement at the age of 55 years on September 20, 1955, the company executed a trust deed on September 16, 1948, in favour of three trustees to w horn the company paid a sum of Rs. l,09,643 and further undertook to pay annually Rs. 4,364 for six consecutive years.

The trustees undertook to hold the said sums upon trust to spend the same in taking out a Deferred Annuity Policy with an Insurance Society in the name of the trustees but on the life of H under which a certain sum of money was payable annually to H for life from the date of his superannuation. It was also provided in the deed that notwithstanding the main clause the trustees would, if so desired by the company, take out instead a different kind of policy for the benefit of both H and his wife, with a further provision for H's wife should H die before he attained the age of 55. On January 12, f949, the trustees took out a policy, wherein the amount of Deferred Annuity to be paid per annum was fixed according as whether both H and his wife were living on September 20, 1955, or one of them died earlier.

The policy also contained, inter alia, two clauses: "(1) Provided the contract is in force and unreduced, the Grantees (i. e., the trustees) shall be entitled to surrender the Annuity on the Option Anniversary (i.e., Sept. 20, 1955) for the Capital sum of£ 10,169 subject to written notice of the intention to surrender being received by the Directors of the Society within the thirty days preceding the Option Anniversary. (2) If both the Nominees shall die whilst the Contract remains in force and unreduced and before the Option Anniversary the said funds and Property of the Society shall be liable to make repayment to the Gran tees of a sum equal to a returu of all the premiums which shall have been paid under this Contract without interest after proof 'thereof and subject as hereinbefore provided."

The appellant company paid the initial sum and the yearly premia for some years before H died.

For the assessment years 1949-50, 1950-51, 1951-52 and 1952-53, the appellant claimed a deduction of these sums from its profits _or gains under s. l0(2)(xv)

of the Indian Income-tax Act, 1922, but the Income-tax authoriz959 ties disallowed the claim on the ground that the sums claimed did not amount to expenditure within the meaning of the section.

The Indian The appellant's contention was that payment of pension was an Moasses Co. expenditure of a revenue character and so also the payment of a (Prwate) Ltd. lump sum to get rid of a recurring liability to pay such pension v. and that expenditure on insurance was not contingent, because The Commissioner though the contingency related to life and depended on it, the of Incorpe-tax, probabilities were estimated on actuarial calculations and, that West Bengal the expenditure was, therefore, real.

Held, that expenditure which is deductible for the purposes of income-tax under s. ro(2)(xv) of the Indian Income-tax Act, 1922, is one which must be towards a liability actually existing at the time, but the putting aside of money which may become expenditure on the happening of an event is not expenditure.

In the present case, on the terms of the deed of trust, money was placed in the hands of trustees for the purchase of annuities of different kinds, if required, but to be returned if the annuities were not bought, and the clauses in the policy taken out by the trustees showed that till September 20, 1955, the appellant had dominion through the trustees over the premia paid. The payment to the trustees was therefore towards a liability depending on a contingency. Consequently, the amount claimed was not liable to be deducted as an expenditure under s. ro(2)(xv) of the Act.

Cases on English Income-tax law reviewed.

CIVIL

APPELLATE

JURISDICTION: Civil Appeal No. 395 of 1957.

Appeal by special leave from the judgment and order dated December 21, 1955, of the Calcutta High Court in Income-tax Reference No. 15 of 1954.

A. C. Sampath Iyengar, Dipak Dutta Choudhury and B. N. Ghosh, for the appellant.

M. C. Setalvad, Attorney-General for India, R. Ganapathy Iyer, R.H. Dhebar and D. Gupta, for the respondent.

1959. May 5. The Judgment of the Court was delivered by

HIDAYATULLAH, J.-The Indian Molasses Co. (Pri- Hidayat"llah J. vate) Ltd., Calcutta (hereinafter called the assessee Company), have brought this appeal, with the special leave of this Court granted on November 9, 1956, against the judgment of the High Court of Calcutta dated December 21, 1955, in Income-tax Reference

1959 No. 15 of 1954.

The question of law referred to the

The Indian High Court was : Molasses Co. " 'Whether on the facts and in the circumstances (Pdvate) Ltd. of the case, and on a true construction of the Trust ' v.

Deed, dated 16th September, 1948, and the Policy The Commissioner dated the 13th January, 1949, the payments made by

01 Income-tax, the assessee Company and referred to in paragraph 4

West Bengal b t't t ' d't ' 'th' th . f' a ove cons I u e expen I ure w1 m e meanmg o Hidayatnllah J. that word in section 10(2)(xv) of the Indian Income. tax Act, 1922, in respect of which a claim for deduction can be made, subject to the other conditions mentioned in that clause being satisfied".

The question was answered in the negative.

The facts of the case are as follows : One John Bruce Richard Harvey was the Managing Director of the assessee Company in 1948. He had by then served the Company for 13 years, and was due to retire at the age of 55 years on September 20, 1955.

There was, it appears, an agreement by which the Company was under an obligation to provide a pension to Harvey after his retirement. On September 16, 1948, the Company executed a Trust Deed in favour of three trustees to whom the Company paid a sum of£ 8,208-19-0 (Rs. 1,09,643) and further undertook to pay annually Rs. 4,364 (£ 326-14 sh.) for six consecutive years, and the trustees agreed to execute a declar.ation of trust. The trustees undertook to hold the said sums upon trust to spend the same in taking out a deferred Annuity Policy with the Norwich Union Life Insurance Society in the name of the trustees but on the life of Harvey under which £ 720 per annum were payable to Harvey for life from the date of his superannuation. It was also provided in the deed that notwithstanding the main clause the trustees would, if so desired by the assessee Company, take ont instead a deferred longest life policy, with the said Insurance Company, in their names, but in favour of Harvey and Mrs. Harvey for an annuity of £ 558-1-0 per annum payable during their joint lives from the date of Harvey's superannuation and during the lifetime of the survivor, provided further that if Harvey died before he attained the age of 55 years the

I959 annuity payable to Mrs. Harvey would be £ 611-12-0 during her life. It was further provided that should f The Indian Harvey die before attaining the age o 55 years, the Molasses co. trustees would stand possessed of the capital value of (Private) Ltd. the Deferred Annuity Policy, upon trust to purchase v • . therewith an annuity for Mrs. Harvey with the above The Commissioner

Insurance Company or another Insurance Company 0! Income-tax, of repute. The other conditions of the deed of trust West Bengal need not be considered, because they do not bear upon Hidayatullah J. the controversy.

In furtherance of these presents, the trustees took out a policy on .January 12, 1949. In addition to conditions usual in such policies, it provided for the following benefits : Amount per annum of deferred Annuity. £ 563-5-8 p. a. if both Mr. and Mrs. Harvey be living on September 20, 1955. £ 720-0-0 p. a. if Mrs.

Harvey should die before September 20, 1955, leaving Harvey surviving her. £ 645-0-0 p. a. if Harvey should die before September 20, 1955, leaving Mrs. Harvey surviving him.

There was a special provision which must be reproduced:

"Provided the contract is in force and unreduced, the Grantees (i.e., the trustees) shall be entitled to surrender the Annuity on the Option Anniversary (i.e., Sept. 20, 1955) for the Capital sum of £ 10,169 subject to written notice of the intention "to surrender being received by the Directors of the Society within the thirty days preceding the Option Anniversary." Two other clauses of the second schedule of the Policy may also be quoted: (III) "If both the Nominees shall die whilst the Contract remains in force and unreduced and before the Option Anniversary the said funds and Property of the Society shall be liable to make repayment to

1959 the Grantees of a sum equal to a return of all the premiums which shall have been paid under this Contract The Indian Molasses co. without interest after proof thereof and subject as (Private) Ltd. herein before provided. v. (IV) The Grantees shall before the Option Annin, Commissioner versary and after it has acquired a Surrender Value

01 Income-tax, be entitled to surrender the Contract for a Cash Pay- West Bengal ment equal to a return of all the premiums (at the

Hidayatullah f. yearly rate) which have been paid less the first year's premium or five per cent. of the Capital Sum specified in the Special Provision of the First Schedule whichever shall be the lesser sum, provided that if the Deferred Annuity has been reduced an equivalent reduction in the guaranteed Surrender Value as calcu- • lated above will be made. "

The assessee Company paid the initial sum and the yearly premia for some years before Harvey died. In the assessment years 1949-50, 1950-51, 1951-52 and 1952-53, it claimed a deduction of.these sums from its profits or gains under s. 10(2)(xv) of the Indian Income-tax Act (hereinafter called the Act), which provides: . "Such profits or gains shall be computed after making the following allowances, namely,

any expenditure (not being in the nature of capital expenditure or personal expenses of the assessee) paid out or expended wholly and exclusively for the purposes of such business, profession or vocation. " This claim was disallowed by the Department and the Appellate Tribunal. The Tribunal held that it was not necessary to decide if the expenditure was wholly or exclusively for the purposes of the Company's business, and if so, whether it was of a capital nature, because in the Tribunal's opinion there was no expenditure at all. The reason why the Tribunal held this way may be stated in its own words :

"Clauses (I) and (II) do not contain any provision having a material bearing upon Clause (III).

Therefore if it happens that both Mr. and Mrs. Harve:y die before 20th September, 1955, all the payments till made through the Trustees to the Insurance Society will come back to the Trustees and as there is not the

slightest trace of any indication anywhere that the 1959 Trustees should have any beneficient interest in these moneys, there would be a resultant trust in favour of The Indian Molasses Co. the Company in respect of the m_oneys thus far paid (Private Ltd.) out. In other words, what has been done amounts to v. a provision for a contingency which may never arise. The Commissioner Such a provision can hardly be treated as payment to of Income-tax, an employee whether of remuneration or pension or West Bengal gratuity, and cannot be a proper deduction against Hidayatullah J. the incomings of the business of the Company for the purpose of computing its taxable profits. In short, there has been no expenditure by the Company yet; there has been only an allocation of a part of its funds for an expenditure which may (or may not) have to be incurred in future. "

The Tribunal, however, referred the above-stated question for the opinion of the High Court. The High Court noticed the limited scope of the question, and pointed out that the Tribunal had stated at the end of the Statement of the Case:

" In the event of the High Court holding that there was an expenditure in this case, it would still be necessary for the Tribunal whether the money was laid out or expended wholly and exclusively for the purposes of the assessee's business and, if so, whether the expenditure was in the nature of capital or revenue expenditure. " The learned Chief Justice of the Calcutta High Court (Sarkar, J., concurring) felt the difficulty of the question.

He analysed the ingredients of cl. (xv), and pointed out that the question referred to but one such ingredient. The Divisional Bench, however, did not call for an additional statement of fact, or ask that the rest of the matter be referred, so that the whole of the question involved might get disposed of.

It observed:

"This Court has always construed questions referred to it with a certain degree of strictness and has not allowed any point to be canvassed before it which had not been raised before the Appellate Tribunal and which was not covered by the Tribunal's

r959 appellate order. I am, therefore, of opinion that the

The Ind; an question should be taken as covering only the ground Molasses co. upon which the Tribunal held the payments to be not (Private) Lid. allowable as deductions as not embracing any other v. ground. " The Commissioner We must express our regret that the case took the of Income-tax, course it did. The order of assessment was passed as

rVest Bengal .c b k 9 d lar ac as 1 52, an seven years have now passed

Hidayatullah J. during which only one question out of three is before the Courts for decision. Section 10(2)(xv) was analysed by the learned Chief Justice in these words :

" It w'ill be noticed that three ingredients of the clause lie on the surface of its language. In order that a deduction may be claimed under its provisions, it must be proved first that there was an expenditure, secondly, that the expenditure was not in the nature of a capital expenditure-I am leaving aside the personal expenses-and, thirdly, that it was laid out or expended wholly and exclusively for the purposes of the assessee's business-I am leaving out profession or vocation. "

We must not be understood as finding fault with the Divisional Bench. It decided the question as framed. It is the Tribunal which referred the question in this form, keeping to itself the right to decide about the other ingredients of the clause later. \Vhether the question can be answered in the bland form it is posed, is a matter to which we will have to address ourselves presently. But it appears to us that this is a very unsatisfactory way to go about the business.

Perhaps, the Tribunal decided this case in this way and referred the question it did, because it felt that if this Court in Allahabad Bank Ltd. v. Commissioner of Income-tax, West Bengal (1 ) was able to decide whether a particular outlay was ' expenditure ' without reference to the other ingredients of cl. (xv), the same could be done in this case also. That case, however, was very different in its facts. Thero, certain contributions on trust for payment of pensions to employees were held not to be ' expenditure ', because on the original trust failing, the money was

(t) (1954] S.C.R. 195.

deemed to be held by the trustees on a resulting trust r959 for the benefit of the maker. If the same can be said The Indian in this case, namely, that the money coninued to Molasses co. belong to the assessee Company 'in the account years, (Private) Ltd. its payment to the trustees or the Insurance Company v. notwithstanding, there may be a possibility of answer- The Commissioner ing the question as was done in the decision of this of Income-tax, C t td 'l' B t 'f h l t .

West Bengal our 01 e ear ier. u I sue a c ear-cu proposition cannot be laid down, then, obviously, there is Hidayatullah J. considerable difficulty in deciding what is 'expenditure ' within the clause, without reference to the rest of its provisions. Of course, to find the meaning of the word 'expenditure ', a dictionary is all that is needed, but to go further and to decide whether the outlay in this case was ' expenditure ', the context in which the word is used in the clause cannot successfully be left out.

Mr. Sampath Iyengar for the assessee Company complained before us of the narrowness of the question, though before the High Court he was opposed to any extension of the ambit of the question. The following passage from the judgment of the Chief Justice shows the respective attituds of the Department and the assessee Company before the Bench:

"Mr. Meyer contended that that language entitled him to argue not only that there had been no expenditure in fact at all, but also that even assuming that there had been an expenditure in the sense of a physical spending, still the expenditure was not such as could be claimed as an allowance under the clause against the profits of the relevant accounting year in view of the fact that it was, in any event, an expenditure made to meet a contingent liability.

Mr. S. Iyengar, who appeared on be'half of the assessee, objected to the scope of the question being so enlarged and he referred to the appellate order of the Tribunal which had proceeded on a single ground. "

The learned Attorney-General who appeared for the Department at once conceded the difficulty of answering the question, but contended that the question in its present form could be answered, though he agreed that if it could not, the Court would be free to say so.

r959 We cannot help saying that though the Tribunal may Th, Indian be at liberty to decide a case as appears best to it, Molasses Co. there is considerable hardship to the tax-payers, if (Private) Ltd. questions of law are decided piecemeal and repeated

The C v. . . references to the High Court are necessary. The juris- 0'"'""·"0"" d' t' f th H' h C t . d . d 1 . of Inconie-tax.

IC 10n o e Ig our IS a visory an consu tative, west Brngol and questions of interpretation of the law in this attenuated form can well be avoided.

This will tend Hidayatullah J. to cut down the duration of litigation.

In deciding that the payment of the lump sum and premia was not 'expenditure ', different views were expressed as the case progressed. The Income-tax Officer held that in the absence of a written agreement covering the conditions of service, remuneration, etc., the arrangement could only be taken as a provision for a gratuity, more so as there was a provision in the deed of trust for payment of an annuity to Mrs. Harvey in the event of Harvey's demise.

According to him, there were so many alternative arrangements for the disbursement of the money laid out, that it was impossible to say what shape the annuity would ultimately take and till certain events happened, the ' expenditure ' w!ts not effective. Following, therefore, the case in Atherton v. British Insulated and H elsby Cables, Ltd. (1 ) and distinguishing Hancock v. General Reversionary and Investment Co. Ltd. ('), the claim for deduction was rejected by the Income-tax Officer.

The Appellate Assistant Commissioner considered that in the absence of an agreement the payment must be regarded as an ex gratia payment of a capital nature, so long as the trust intervened. The Appellate Assistant Commissioner also commented upon the existence of a provision for Mrs. Harvey's pension which could not be a part of the agreement. He was thus of the opinion that the case fell within the rule laid down in Atherton's case (1).

This opinion of the Tribunal which has already been reproduced earlier, was shortly that there was no 'expenditure' yet and this was only an allocation of funds for an 'expenditure', which might or might not be incurred in the future.

The High Court analysed the terms of the deed of

(1) (1925) 10 Tax Cas. 155.

(2) (1918) 7 Tax Cas. 358.

trust, and pointed out that there were two contingenr959 cies in which money was likely to revert to the asses- The Indian see Company. The first contingency was if both Har- Molasses co. vey and Mrs. Harvey died before September 20, 1955. (P, ivate) Ltd.

The second contingency was due to an omission in v.

cl. (III) to provide for a pension to Harvey, if Mrs. The Commissioner Harvey died before the above date. In that event, 01 Income-tax, the trust would have failed, unless a policy was taken West Bengal out under cl. (II). The High Court held that if any Hidayatullah J.

- of these two circumstances happened, then there would have been a resulting trust in favour of the assessee Company, and it would have been entitled to get back all the money laid out by it. We must say here that the High Court was in error as to the second of the two contingencies because the policy which was taken out provided for all the three alternatives, and pension was payable to both or either survivor, though in different sums. Even in the trust deed, the three alternative pensions were provided as follows : £ 720, if the annuity was payable to Harvey alone; or £ 558-1-0, during the joint lives of both or survivor; or £ 611-12-0,. to Mrs. Harvey if Harvey died before September 20, 1955. The special provision in the policy, however, covered the first contingency of both the prospective annuitants dying before September 20, 1955, and if that happened, the assessee Company would have, if it chose to surrender the policy, got back the sum of£ 10,169 subject to a written notice of the intention to surrender being received by the Insurance Company within thirty days preceding September 20, 1955.

The High Court then observed in addition that there was no ' instant necessity ' for the expenditure, nor was the money ' laid out for a business purpose of an instant character', nor did it bring in a 'present asset which would always remain an asset in that form, the money having gone for ever'. The High Court pointed out that there was always a -possibility of a resulting trust in favour of the Company and the money could not, therefore, be held to have been expended. The conclusion of the High Court, therefore, was that the assessee Company must be held to have

'959 set apart ' tentatively' a sum of money in order that it might be available for the payment of a' gratuity' The Indian Molosoes co. to Harvey and Mrs: Harvey, but there being' no pro- (P•ivatc) Ltd. vision for the application of tbe money in the event of

v. those contingencies not occurring and no annuity being n, Commfasiouer payable to any one', there was no 'expenditure ' in of Income-tax. any real and practical sense of the term '.

We; I Bengal Th h' 1 d e arguments mt 1s appea have range , as they

Hidayatullah ;. did before the High Court, over a very wide field. No useful purpose will be served in following them through all their convolutions. The main points urged on behalf of the assessee Company are that payment of pension is an expenditure of a revenue character and so also the payment of a lump sum to get rid of a recurring liability to pay such pension. This is illustrated from some English cases, and reference is made also to Ch. IX-B of the Act. It is also submitted that in so far as payment by the assessee Company was concerned, it was, i_n point of fact, made, and this was ' expenditure ' within the dictionary meaning of the word. The argument of the Department is that by 'expenditure 'is meant a laying out of money for an accrued liability and not for a contingent liability, which contingency may or may not take place; that the present 1trrangement was only a setting apart of money for a contingent liability and till the liability became real, there was no expenditure. The assessee Company, however, contends that expenditure on insurance is not contingent, because though the contingency relates to life and depends on it, the probabilities are great being estimated on actuarial calculations and the expenditure is real.

Both sides rely on a large number of English decisions.

We shall now consider the arguments in detail and refer to those authorities, which are relevant.

In dealing with cases expounding the English In. come-tax law, it must always be borne in mind that the scheme of legislation there is not the same as in our country. No doubt, a certain amount of assistance can, with caution, be taken from them, but the problems under our Income-tax laws must be resolved, in the ultimate analysis, with reference to our laws.

It has been ruled under the English statute that

I959 sums paid to an employee as pension or gratuity are The Indian deductible as money laid out and expended for the Molasses co. purpose of trade, profession or vocation. See Smith v. (Private) Ltd.

Incorporated Council of Law Reporting for England v. and Wales (1). It has also been ruled that a single The Commissioner payment to avoid the recurring liability of an emploof Income-tax, 1 d d Th l d

West Bengal yee's pension is a so a proper e notion. e ea ing case on the subject is Hancock v. General Reversionary Hidayatullah J. and Investment Go. Ltd. (2). In that case, the taxpayer was under a liability to pay a pension to a retired actuary, and pension had, in fact, been paid for some years. Subsequently, the tax-payer purchased an annuity for the employee, which he accepted in place of his pension. The sum paid in purchasing the annuity was allowed as a deduction in computing the tax-payer's profits, it being held that it was money wholly and exclusively laid out or expended for the purposes of the trade, profession or vocation.

On the other hand, a sum which a company put into a fund for the relief of invalidity, etc., was held not to be an admissible deduction, and the case last cited was distinguished. See Rowntree & Go. Ltd. v.

Curtis (3).

Pollock, M. R., drew pointed attention to the words of Lush, J., in the earlier case, where' he observed at p. 698 :-

"It seems to me as impossible to hold that the fact that a lump sum was paid instead of a recurring series of annual payments alters the character of the expenditure, as it would be to hold that, if an employer made a voluntary arrangement with his servant to pay the servant a year's salary in advance instead of paying each year's salary as it fell due, he would be making a capital outlay.'', and added that Lush, J., had described the actuarial payment made in Hancock's case- (2) as a pension in another form, which could not be said of the invalidity, claims for which were wholly uncertain. warrington, L. J., pointed out that the test to apply was fir:; t

(r) [r9r4] 3 K. B. 574; 6 Tax Cas. 477.

(2) (r9r8) 7 Tax Cas. 358.

(3) [1925] r K. B. 328; 8 Tax Cas. 678.

'959 whether there was an expenditure which he held there was, and next whether it could be said to be wholly The Indian Molasses co. and exclusively for the purposes of the trade which, in (Private) Ltd. his opinion, could not be said of the expenditure in v. that case. The words of the learned Lord Justice on The Commissioner the first proposition have a bearing upon tho present

01 Income-tax. case, and may be reproduced here (at p. 703) : West Bengal

" I • 1 d • h M L tt h am me me to agree wit r. a er m 1s Hidayatullah J. contention that the money has actually been expended.

There is nothing like a resulting trust in favour of the company although there is that provision which I have already called attention to in the trust deed, that one of the things which might be done would be to abrogate altogether the trust or the provisions of the deed and to substitute other rules and prov1s10ns.

But it seems to me that that cannot be said to be a resulting trust in favour of the company having regard to the other objects which are pointed out as those to which the scheme was directed." Similarly, a sum of money paid to the trustees to form a nucleus of a pension fund for the benefit of some of its employees by a company was also not held to be an admissible deduction in Atherton's case (1).

Viscount Cave, L. C., recalled the test laid d_own in a rough way by Lord Dunedin in Vallambrosa Rubber Co. v.

Farmer (2) (at p. 192) that,

"capital expenditure is a thing that is going to be spent once and for all and income expenditure is a thing which is going to recur every year", but added that it was not and wa.s not meant to be a decisive test. The Lord Chancellor observed, however, that,

"when an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think that there is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital."

(r) (1925) 10 Tax Cas, 155.

(2) (1910) 5 Tax Cas. 529.

Again, in Morgan Crucible Co. Ltd. v. The Commis- '959 sioners of Inland Revenue (1), the payment to an insur- The Indian ance company to take out a policy was held not to be Molasses co. an admissible deduction. There, the company operat- (Private) Ltrl. ed a scheme for payment of pensions to retired or v. incapacitated employees, reserving to itself the uncon- The Commissioner

trolled discretion to vary or cease payment of penofw 1"1cBomc-ta1x, .

Wh . 'd h d d d es enga s10ns. en pens10ns were pa1 , t ey were e ucte but when the company took out a policy, without Hidayatullah J. informing their employees, for payment to itself of annuities equal to the pensions, it was held that by this the company had acquired an asset .and this was in the nature of a capital asset.

Rowlatt, J., in distinguishing Hancock's case (2), observed that unlike that case the liability to pay pensions was not got rid of and that the company had acquired an asset.

The learned Judge continued (at p. 317):

" It is true they have got an asset which would give them, in all probability, nothing on balance, because they use it to pay these pensions ; but they have got an asset; they had not any pension fund to pay these pensions with, and now they have got an insurance company which will in the future not extinguish the liability but countervail it and they

have got the command of this policy to the extent that they are entitled to get their capital money-I say ' capital money ' without prejudice-back from the insurance company on surrendering the policies."

From these cases, there are deducible certain principles of a fundamental character. The first is that capital expenditure cannot be attributed to revenue and vice versa. Secondly, it is equally clear that a payment in a lump sum does not necessarily make the payment a capital one. It may still possess revenue character in the same way as a series of payments.

Thirdly, if there is a lump sum payment but there is no possibility of a recurrence, it is probably of a capital nature, though this is by no means a decisive test.

Fourthly, if the payment of a lump sum closes the

(r) [1932] 2 K. B. 185; r7 Tax Cas. 311, 317.

(2) (1918) 7 Tax Cas. 358.

z959 liability to make repeated and periodic payments in the future, it may generally be regarded as a payment The Indian Molasses co. of a revenue character (Anglo-Persian Oil Go. Ltd. v. (Private) Ltd.

Dale) (1), and lastly, if the ownership of the money v. whether fn point of fact or by a resulting trust be still The Commissioner in the tax-payer, then there is acquisition of a capital of Income-tax, asset and not an expenditure of a revenue character.

West Bengal S'd b 'd ' h h ' ' 1 th th 1 e y SI e wit t ese prmmp es, ere are o ers

Hidayatullah J. which are also fundamental. The Income-tax law.does not allow as expenses all the deductions a prudent trader would make in computing his profits. The .money may be expended on grounds of commercial expediency but not of necessity. The test of necessity is whether the intention was to earn trading receipts or to avoid future recurring payments of a revenue character.

Expenditure in this sense is equal to disbursement which, to use a homely phrase, means something which comes out of the trader's pocket.

Thus, in finding out what profits there be, the normal accountancy practice may be to a.How as expense any sum in respect of liabilities which have accrued over the accounting period and to deduct such sums from profits. But the Income-tax laws do not take every such allowance as legitimate for purposes of tax.

A distinction is made between an actual liability in praesenti and a liability de futuro which, for the time being, is only contingent. The former is deductible but not the latter. The case which illustrates this distinction is Peter Merchant Ltd. v. Stedeford (').

No doubt, that case was decided under the system of Income-tax laws prevalent in England, but the distinction is real. What a prudent trader sets apart to meet a liability, not actually present but only contingent, cannot bear the character of expense till the liability becomes real.

We may here refer to two other cases. In Alexander Howard & Go. Ltd v. Bentley ('), a business of blouse and gown manufacture was carried on by one A. C.

Howard. His three brothers were employed by him.as salaried managers. In 1933 A. C. Howard remarried

(1) [1932] I J(. B. 124; 16 Tax Cas. 253.

(2) (1948) 30 Tax Cas, 496.

(3) (1948) 30 Tax Cas 334.

and under pressure from his brothers a company was r959 formed and the directors were authorised to enter into The Indian an agreement to purchase the business. A. C. Howard h

."''vlolass11s Co. was the governing director oft e company and his (Private) Ltd. three brothers, permanent directors. The company also v. entered into a service agreement with them, and Art. The Commissioner

107 thereof provided: 01 Incoine-tax, " After the death of the said Alexander Charles West Bengal Howard and during such time as his legal personal Hidayatullah J. representatives shall hold at least Ten Thousand Shares in the Company, any widow surviving him shall receive out of the profits of the Company an annuity of One Thousand Pounds per annum during her life." This service agreement was executed on January 3,

1934. In 1943 by a deed of release A. C. Hmvard released to the company all right to a claim in respect of the annuity in consideration of the payment to him of a sum of£ 4,500.

This amount was based upon the findings of an actuary. The taxpayer submitted that the sum pa.id in redemption of the annuity was a proper charge against revenue, and was deductible.

The Commissioners held against the company on two main grounds. They held that in order to decide whether the sum paid to obtain release of the annuity was properly allowable as a deduction, they had to decide first whether the annuity itself would have been properly chargeable to revenue, (Anglo-Persian Oil Co. Ltd. v. Dale (1) and Bean v. Doncaster Amalgamated Collieries Ltd. (2) per Lord Simon at pp. 311-312); and they helu next that the redemption of the annuity freed the company from a contingent liability and the company had thus secured only an enduring advantage.

Singleton, J., before whom the case came in appeal, affirmed the decision.

He pointed out that this was not a case of a company providing an annuity or pension for an employee, "for" (to quote him) " the wife of Mr. Alexander Charles Howard had notliing whatever to do with the Company".

If, therefore,

(r) [1932/ r K. B: Il{; r6 Tax Cas. 253.

(2) (r9i6) '27 Tax Cas, 296.

1959 the original annuity was not chargeable to revenue,

The Indian the sum of£ 4,500 paid to avoid it, could not also be.

Molasses co.

The other case is Southern Railway of Peru Ltd. v. (P, ivate) Ltd.

Owen('). In that case, the English compa.ny was v. bound to provide compensation to all its employees on The Commission" the termination of their services. Legislation to this of Income-tax, effect was deemed to be a part of the contract of West Bengal • S h . h d. . ] . serv10e. uc ng t arose on rnmrnsa or on termma-

Hidayatullah J. tion of the employment by the employer after proper notice.

The compensation was an amount egufLl to one month's salary for every year of service. There were, however, certain exceptions under which the compensation was not payable. The company sought to deduct an amonnt equal to the burden cast on it each yefLr but the claim was refused. It WfLS held by majority that though 'the company was entitled to chfLrge against one year's receipts the cost of making provision for the retirement payments which would ultimately be payable as it had the benefit of the employees' services during that year, provided the present value of the future payments could be fairly estimated', since the factor of discount was ignored in making the deduction, the claim could not be entertained.

These two cases illustrate the propositions that the recurring liability of a pension which is compressed into a lump payment should itself be a legal obligation, and that, if contingent, the present value of the future payments should be fairly estimable. IC the pension itself be not payable as an obligation, and if t.here be a possibility that no such payment may be necessary in the future, the whole of the amount cannot be deducted but only the present value of the future liability, if it can be estimated. It is significant that the case in Sun Insurance Office v. Clark(') was applied to the last corollary.

So far, we have dealt with the principles which underlie leading cases decided in England, some of w hicb were in the forefront of the arguments. 'Ve have already stated that the English decisions should be read with considerable caution. Under the English Income-tax Act, the law is stated in a negative

(I) [1957] A.G. 334-

(2) [1912] A.G. 443.

fom. Section 137 of 15 & 16, Geo. 6 & 1 Eliz. 2, c. 10, r959 which prescribes the general rules rrgarding deduc- The Indian tions is expressed in the negative, and r. (a) which was Molasses co. applicable to the cited cases reads as follows: (Private) Ltd. "Subject to the provisions of this Act, in computv. ing the profits or gains to be charged under Case I or The Commissioner Case II of schedule D, no sum shall be deducted in ofwlnco3me-ta1x, est enga respect of-

. (a) any disbursements or expenses, not being Hidayatullah J. money wholly and exclusively laid out or expended for the purposes of the trade, profession or vocation." In these several cases, emphasis was sometimes laid on the words "wholly and exclusively", sometimes on " laid out or expended " and som.etimes on " for the purposes of the trade ... ". It was the nature of the liability or the time of payment or the value of the payment or all of them which determined whether the amount should be deducted or not.

Clause (xv) of s. 10(2) of the Act, with which we are concerned, reads as follows :

10. "Business-(1) The tax shall be p>tyable by an assessec under the head 'Profits and gains of business, profession or vocation' in respect of the profits or gains of any business, profession or vocation carried on by him.

(2) Such profits or gains shall be computed after making the following allowances, namely-

(xv) any expenditure not being an allowance of the nature described in any of the clauses (i) to (xiv) inclusive, and not being in the nature of capital expenditure or personal expenses of the assessee laid out or expended wholly an<l exclusively for the purpuse of such business, profession or vocation."

This section, though it enacts affirmatively what is stated in the negative form in the English statute, is substantially in pari materia with the English enactment and would have justified our considering the English authorities as aids to the interpretation thereof.

But there is no case directly on what is 'expenditure ', and if the authorities under the English statute

r959 were to be of real assistance, the whole of -tho matter should have been before us.

The question, however, The Indian I" h Molams Co. 1mits t e approach to whether the payments made (P, foalc) Ltd. towards the policy were 'expenditure ' within cl. (xv). v. ' Expenditure' is equal to 'expense' and 'expense' is The Commission" money laid out by calculation and intention though in

01 Income-tax, many uses of the word this element may not be pre-

West Bengal t I I f k h ' sen , as w 1en we spear o a JO eat anot er s expense.

llidayatullah J. But the idea of 'spending' in the sense of 'paying out or away' money is the primary meaning and it is with that meaning that we are concerned. 'Expenditure' is thus what is 'paid out or away' and is something which is gone irretrievably.

To be an allowance within cl. (xv), the money paid out or away must be (a) paid out wholly and exclusively for the purpose of th.e business and further

(b) must not be (i) capital expenditure, (ii) personal expense or (iii) an allowance of the character described in els. (i) to (xiv). But whatever the character of the expenditure, it must be a paying out or away, and

"\l'C are uot concerned with the other qualifying aspects of R1rnh expenditure stated in the clause either affirmatively or negatively.

So, the question is whether in a business sense the amount was spent, that is to say, paid out or away.

To discuss this, we must go to the terms of the policy.

No doubt, under the general terms of the policyan annuity was to be provided for the Harveys.

We are not concerned with Mrs. Harvey, because she had no claim to the annuity or pension any more than Mrs.

Howard had in Alexander Howard & Go. Ltd. v. Bentley (1) already discussed by us elsewhere. That consideration involves a finding on whether an annuity to Mrs. Harvey was an expense made wholly and exclusively for the purpose of the business, and that is not a matter open to us by the limited question posed. In any event, the provision for a pension or annuit.y to Mrs. Harvey cannot rank higher than an ftnnuit,, to Harvey, and the matter can be considered on the "limited aspect that a pension or annuity to Harvey was also contemplated.

(r) (1948) 30 Tax Cas. 334

In the years of account the assessee Company did z959 hand out to the trustees, the sums of money for which The Indian deduction is claimed.

But was the money spent in so Molasses co. far as the assessee Company was concerned ? Harvey (Private) Ltd. was then alive and it was not known if any pension to v. him would be payable at all. Harvey might not have The Commissioner d b H h b of Income-tax hve to e 55 years. e might even ave a andoned West Bengal' his service or might have been dismissed. Till September 20, 1955, the assessee Company had dominion Hidayatullah J. through the grantees over the premia paid, at least in two circumstances. They are to be found in the special provision, and the third clause of the second schedule of the policy. These provisions have been quoted already, but may again be reproduced:

"Special provision: Provided the contract is in force and unreduced, the Grantees shall be entitled to surrender the Annuity on the Option Anniversary for the Capital sum of . £ 10,169 subject to written notice of the intention to surrender being received by the Directors of the Society within the thirty days preceding the Option Anniversary." CL (III): "If both the Nominees shall die whilst the Contract remains in force and unreduced and before the Option Anniversary the said funds and Property of the Society shall be liable to make repayment to the Grantees of a sum equal to a return of all the premiums which shall have been paid under this Contract without interest after proof thereof and subject as hereinbefore provided."

To be a payment which is made irrevocably there should be no possibility of the money forming, once again, a part of the funds of the assessee Company.

If this condition be not fulfilled and there is a possibility of there being a resulting trust in favour of the

Company, then the money has not been spent, i.e., pa'id out or away, but the amount must be treated as set apart to meet a contingency. There is a distinction between a contingent liability and a payment depending upon a contingency. The question is whether in the years of account, one can describe the assessee Company's liability as contingent or merely depending

z959 upon a contingency. In our opinion, the liability was contingent and not merely depending upon a contin- The Indian Molasses Co. gency (P1iva") Ltd. hat such a distinction is real was laid down in the

v. . . speech of Lord Oaksey in Southern Railway of Peru The Commimoner Ltd. v. Owen (1), and was recognised generally in the of Income-tax h f th h L L d N h r West Bengal' speehc es. oh ot erf haw or s. r, O\fv, t e 9us 1oh11 is w at 1s t e e11ect o t e 'payment o premia m t e

Hidayatnllah J. present case ?

Learned counsel for the assessee Company referred us to the provisions of Chapter IX-B of the Act, particularly ss. 58R, 588 and 58V thereof.

We regret we are not able to see how these provisions help in the matter. We are not concerned with the provisions of this Chapter,. because the allowance does not fall within any of the provisions, 31nd . we have only to decide the question whether the amounts paid to purchase the policy involved an expenditure in the accounting years.

Next learned counsel relied upou Joseph v. Law Integrity Insurance Company, Limited('), Prudential Insurance Company v. Inland Revenue Commissioners (3) and In re National Standard Life Assurance Corporation(') to show that there was no contingent liability but a liability depending on a contingency, namely, the duration of life, the probabilities of which were estimated on actuarial calculations.

No doubt, these cases deal with insurance of human life but the observations therein are not material here. In the first of these cases, it was held that the kind of policies which were issued were policies of insurance on human lives, and that the company was carrying on the business of life insurance contrary to its memorandum of association and the policies were ultra vires the company.

The policies were also illegal within s. 1 of the Assurance Companies Act, 1909. In this context, the definition that ' a policy of life insurance ' means ' any instrument by which the payment of monies, by or out of the funds of an assurance company, on the

(1) [1957] A.C. 334.

(3) [1904] 2 K.B. 658.

(2) [1912] 2 Ch. 58r.

(4) [1918] l Ch. 427, 430.

happening of any contingency depending on the durar959 tion of human life, is assured or secured ' was referred The Indian to. The policies issued by the company, £hough osten- Molasses co. sibly called 'investment policies ' were held to be (Private) Ltd. really life insurance policies. The next case arose v. under s. 98 of the Stamp Act, 1891. It was held that The Commissioner a contract by which in consideration of the payment of Income-tax. b f kl .

West Bengal y a person o a wee y premium, a sum certain was payable to him on his attaining the age of 65 or, in Hidayatullah J. the event of his dying earlier, a smaller sum was to be paid to his executors, was a policy of insurance upon a contingency depending upon a life within the meaning of the section. In the last case, the question arose under s. 30 of the Assurance Companies Act, 1909, and it was decided that a certificate-holder held a policy on human life because money was payable not only at the expiration of a certain number of years but all premiums were repayable in the event of death to the legal representative.

These cases may help to determine the nature of the contract with the insurance company but cannot help in the solving of the question whether the payments to the insurance company were expenditure. That insurance of human lives involves a contingency relating to the duration of human life is a very' different proposition from the question whether the payment in the present case to the trustees was towards a contingent liability or towards a liability depending on a contingency.

In our opinion, the payment was not merely contingent but the liability itself was also contingent. Expenditure which is deductible for income-tax purposes is one which is towards a liability actually existing at the time, but the putting aside of money which may become expenditure on the happening of an event is not expenditure. In the present case, nothing more was . done in the account years. The money was placed in the hands of trustees and/or the insurance company to purchase annuities of different kinds, if required, but to be returned if the annuities were not bought and

IZf

<959 the setting apart of the money was not a paying out or away of these sums irretrievably.

The Indian Molasses co.

In our opinion, the question was correctly answered (Private) Ltd. by the Calcutta High Court.

We, therefore, dismiss v. the appeal with costs.

The Commissioner of Income-tax,

West Bengal

H idayatullah J.

I959

May 5.

Appeal dismissed.

M/S. SARUPCHAND HUKAMCHAND & CO.

UNION OF INDIA AND OTHERS

(S. R. DAS, C. J., N. H. BHAGWATI and

M. HIDAYATULLAH, JJ.)

Income-tax--Assessment of unregistered firni treated as registered by Income-tax Officer-Appeal against orders of assessment- Finding of profit reversed and fresh assessment dirccted-Effect- Duty of Income-tax Officer-Indian Income-tax Act, I922 (XI of I922), SS. 23(5)(b), 24(2)(d) and JI(4).

The Income-tax Officer found that the assessee, an unregistered firm, had made a profit in the assessment year I940-4r. He treated it as registered under s. 23(5)(b) of the Act, assessed the partners and carried the profit to their individual returns, making no demand on the firm.

For the next t\vo assess1nent years, hoVvever, the firm \\'as assessed as unregistered firm.

For all the three assessment years, the Income-tax Officer treated the firm as" resident and ordinarily resident". The firm appealed against all these assessments.

The appeals were all consolidated and heard together by the Appellate Assistant Commissioner.

He found that the firm was non-resident, the computation of income n1ade by the Income-tax Officer was erroneous, that in the assessment year 1940-41 there was a loss and during the subsequent years the firm had made profits.

He, therefore, directed the Income-tax Officer to modify the assessments accordingly.

Thereupon the Income-tax Officer gave relief to the partners for the year 1940-41 and directed certain refunds to be made to them. The firm was not satisfied and moved both the Income-tax Officer and the Appellate Assistant Commissioner

THE INDIAN MOLASSES CO. (PRIVATE) LTD

L. KAPUR

M. HIDAYATULLAH, JJ.

Indian Income-tax Act

Indian Income-tax Act, 1922

Indian Income-tax Act, 1922

section 10(2)(xv)

First Schedule

s. 10(2)(xv)

Income-tax Act

Section 10(2)(xv)

Income-tax Act

Section 137

s. 10(2)

ss. 58R, 588 and 58V

s. 1

Assurance Companies Act, 1909

s. 98

Stamp Act, 1891

s. 30

Assurance Companies Act, 1909

Income-tax Act

SS. 23(5)(b), 24(2)(d)

s. 23(5)(b)


986 SUPREME COURT REPORTS [1959] Supp.

<959 the setting apart of the money was not a paying out or away of these sums irretrievably.

The Indian Molasses co.

In our opinion, the question was correctly answered (Private) Ltd. by the Calcutta High Court.

We, therefore, dismiss v. the appeal with costs.

The Commissioner of Income-tax,

West Bengal

H idayatullah J.

I959

May 5.

Appeal dismissed.

M/S. SARUPCHAND HUKAMCHAND & CO.

UNION OF INDIA AND OTHERS

(S. R. DAS, C. J., N. H. BHAGWATI and

M. HIDAYATULLAH, JJ.)

Income-tax--Assessment of unregistered firni treated as registered by Income-tax Officer-Appeal against orders of assessment- Finding of profit reversed and fresh assessment dirccted-Effect- Duty of Income-tax Officer-Indian Income-tax Act, I922 (XI of I922), SS. 23(5)(b), 24(2)(d) and JI(4).

The Income-tax Officer found that the assessee, an unregistered firm, had made a profit in the assessment year I940-4r. He treated it as registered under s. 23(5)(b) of the Act, assessed the partners and carried the profit to their individual returns, making no demand on the firm.

For the next t\vo assess1nent years, hoVvever, the firm \\'as assessed as unregistered firm.

For all the three assessment years, the Income-tax Officer treated the firm as" resident and ordinarily resident". The firm appealed against all these assessments.

The appeals were all consolidated and heard together by the Appellate Assistant Commissioner.

He found that the firm was non-resident, the computation of income n1ade by the Income-tax Officer was erroneous, that in the assessment year 1940-41 there was a loss and during the subsequent years the firm had made profits.

He, therefore, directed the Income-tax Officer to modify the assessments accordingly.

Thereupon the Income-tax Officer gave relief to the partners for the year 1940-41 and directed certain refunds to be made to them. The firm was not satisfied and moved both the Income-tax Officer and the Appellate Assistant Commissioner

under s. 35 of the Act, claiming that inasmuch as it had been c959 found to have incurred a Joss in the first of the three assessment years, it could not for that year be treated as a registered firm M /s. Sarupchand and was entitled to carry forward the Joss to the subsequent Hukamchand & Co. years.

They declined to interfere on the ground that the direcv tion of the Income-tax Officer under s. 23(5)(b), not being appeal- Union of India able, had become final and the time within which the original & Others order of the Income-tax Officer could be rectified had also run out. The firm went up to the Commissioner and the Central Board of Revenue, but to no effect. Thereafter it moved the High Court under Art. 226 of the Constitution. The single Judge who heard the matter declined to interfere. The Division Bench on appeal agreed with the single Judge. The firm appealed to this Court. The question for decision was whether after the finding of profit made by the Income-tax Officer had been turned to one of Joss by the Appellate Assistant Commissioner on appeal, the original decision of the Income-tax Officer to treat the firm as a registered one under s. 23(5)(b) could remain intact.

Held, that since the Income-tax Officer could treat an unregistered firm as a registered one under s. 23(5)(b) of the Indian Income-tax Act only if there was a profit, the reversal of the finding of profit made by him by the Appellate Assistant Commissioner must automatically take away the jurisdiction of the Income-tax Officer to act under that section and his order made thereunder must fall through.

It made no difference in the instant case, whether the Appellate Assistant Commissioner's order was one under cl. (a) of s. 31(3} or under cl. (b) of that section, for the effect of the order in law in either case would be the same, namely, the annulment of the assessment resulting in the restoration of the case back to its original position.

It was not correct to suggest that under proviso ( d) to s. 24(2) of the Act the losses of an unregistered firm could be carried to the partners' account as if the firm was registered.

That proviso was not intended to enable the Income-tax Officer to forego the obligation laid on him by cl. (b} of s. 23(5), i.e., to find out the interest of the Revenue, and thus to render the words 'during any year ' in proviso rednndant. The effect of the proyisions of s. 23(5)(b) and the proviso (d) to s. 24(2), which must be read together, was that the proviso was to be invoked subject to the conditions under s. 23(5}(b) to obtain more revenue for the State by applying s. 23(5)(a).

Although the Appellate Assistant Commissioner ould not have interfered with the order made by the Income-tax Officer under s. 23(5}(b) of the Act in an appeal against that order, the position must be different when the assessment itself was subject to appeal under s. 31 of the Act, and the Appellate Assistant Commissioner under s. 3r(4) authorised the Income-tax Officer to modify the assessment in the light of his direction. It would, therefore, be the duty of the Income-tax Officer to consider de

I959 nova \Vhether in the altered circun1stances the provisions of s. 23(5)(b) of the Act could at all be applied. 1\-1/s. Sarupchoind.

Co11unissioner of lnco11ie-tax v. Tribune 1'rust, Lahore, [1948] Hukamchand 6' C0 16 I.T.l{. 214, Comntissioncr of Inco1ne-tax v. McMillan & Co., . v. . [1958] 33 I.T.R. 182 and Commissioner of Income-tax v. Amritlal Union of India Bhogilal & Co., [1958] 34 I.T.R. 130, considered.

& Others

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 172 of 1955.

Appeal by special leave from the judgment and order dated February 26, 1953, of the Bombay High Court in Appeal No. 108 of 1952, arising ont of the Judgment and order dated July 8, 1952, of the said High Court in its Ordinary Original and Civil Jurisdiction in Misc. No. 48 of 1952.

R. J. Kolah, J. B. Dadachanji, S. N. Andley and Rarneshwar Nath, for the appellant.

Ii. N. Sanyal, Additional Solicitor-General of India, K. N. Rajagopal Sastri and D. Gupta, for the respondents.

1959. May 5.

The Judgment of the Court was delivered by

Hidayatu/lah J.

HIDAYATULLAH, J.-This appeal, by special leave of this Court, is directed against the judgment and order of the High Court of Judicature at Bombay dated February 26, 1953, in Appeal N"o. 108 of 1952.

By that judgment, the Divisional Bench (Chagla, C. J. and Shah, J.) declined to interfere, in Letters Patent Appeal, with the judgment of Tendolkar, J., dated July 8, 1952, in Miscellaneous Application No. 48 of 1952. In the petition which was originally filed in the High Court under Art. 226 of the Constitution, a writ of mandamus was asked against the Union of Inditt ttnd two Income-tax Officers to compel them to give effect to the appellate order of the Appellate Assistant Commissioner of I. T. F. Range, Bombay, dated pril 29, 1949.

The High Court in both the judgments declined the writ.

The facts of the case are as follows: The appellant, Messrs. Sarupchand and Hukamchand and Co., (hereinafter referred to as the assessee firm) was carrying on business, inter alia, as shroffs, merchants and

comm1ss10n agents at Bombay, Indore, Ujjain and r!J59 Calcutta. It had, in the relevant account years, two , 5 ,

S. S h d H k h d d S • H' .ih/s. arupcnand partners, ir arupc. an u amc an an fl Ira- Hukamchand c;,, co lal Kalyanmal. The two partners were also separately v. liable to income-tax, the former as a Hindu undivided Union of India family and the latter as an individual. We are con- & Others cerned here with the assessment years 1940-41, 1941- 42 and 1942-43. These correspond to the account Hidayatullah f. years, 1995-1996 (Samvat) to 1997-1998 (Samvat).

W'hen the assessment of the assessee firm was made, the Income-tax Officer, Section VIII (Central), Bombay, treated the firm as "resident and ordinarily resident". For the assessment year 1940-41 the Incometax Officer found a profit of Rs. 80,358, and applying s. 23(5)(b) of the Indian Income-tax Act (hereafter called the Act), he proceeded to treat the firm which was unregistered as registered for the purpose of assessment. On March 15, 1945, he therefore assessed the two partners carrying the profit into their indivi- • dual returns and made no demand upon the firm. It appears that an application for registration had already been filed under s. 26A of the A.ct before the Income-tax Officer, but it was rejected-and quite correctly-because no instrument of partnership was disclosed. That order was also passed on the same date.

For the assessment years 1941.42 and 1942-43, the Income-tax Officer by his orders dated July 31, 1945, and October 31, 1945, respectively, treated the firm as "resident and ordinarily resident" and as an unregistered firm.

For the first of the two assessment years, h(i) assessed the firm on a total income of Rs. 2,30,798 to income-tax and super-tax, and for the second year, its British Indian income was taken at Rs. 2,62,827 and the total income at Rs. 7,00,116 and was also treated accordingly.

The assessee firm appealed agaimit these assessments.

The Appellate Assistant Commissioner by his order passed in the consolidated appeals on April 29, 1949, held that the assessee firm was non-resident and excluded the income of the firm outside British India, though it was included in the total word income for the purpose of computing the rate of tax.

r959 He also found error in the computation of income

Ml h made by the Income-tax Officer, and held that in s. Sarupc and h 9 h Ihtkamchand & Ca. t e assessment year 1 40-41 t ere was a loss of

Rs. 1,61,084 in the total world income of the assessee Union af India firm.

For the subsequent years also there were slight

& Othm variations in the amounts determined by the Incometax Officer, but it was held that the assessee firm had Hidayatullah f. made profits in those years. The following is the summary of the findings of the Appellate Assistant Commissioner, as given by him in his order:

Assess- Income in Income Total outside meat British British world year India India income.

Rs.

Rs.

Rs. 1940-41 Loss 2,26;028 74,944 Loss 1,61,084 • 1941-42 1,27,062 1,08,236 ... 2,35,298 1942-43 2,62,827 4,41,789 ... 7,04,616

In addition to these findings, the Appellate Assistant Commissioner added a direction to the following effect:

"The Income-tax Officer is directed to mod ifv the assessments accordingly." " When the matter reached the Income-tax Officer, he gave effect to the order of the Appellate Assistant Commissioner under s. 31 of the Act and carried the loss to the partners in their assessments for the year 1940-41, and granted a refund of Rs.16,9.77-11-0 to Sir Sarupchand Hukamchand and Rs. 68,339 to Sri Hiralal Kalyanmal. The assessee firm, however, was not satisfied, and embarked upon voluminous correspondence beginning with a letter dated September 10, 1949, by which it claimed that inasmuch as it had been shown to have incurred a loss in the first of the three assessment years, it could not for that year .be treated as a registered firm, and that as an unregistered firm it was entitled therefore to carry forward the loss to the subsequent years. In addition to the correspondence, the assessee firm moved in turn the Income-tax Officer

as well as .the Appellate Assistant Commissioner res- 1 959 pectively under s. 35 of the Act for rectification of the M/ 5 h d ff f. h s. arupc an assessment to the same e ect.

The officers o t e Hukamchand & co.

Department at both levels declined to interfere, and v. stated that the direction of the Income-tax Officer Union of India under s. 23(5)(b) was not appealable, and had become & Others final.

They also pointed out that the period during H idayatullah J. which the original order of the Income-tax Officer could be rectified (viz., 4 years) had already run out, and that the petitions were accordingly out of time.

The assessee firm moved the Commissioner as well as the Central Board of Revenue, but failed to get the desired order.

Finally, after the receipt of the order of the Central Board of Revenue, the assessee firm applied on July 16, 1951, to the Additional Income-tax Officer, Section VIII (Central), to give effect to an order which , the assessee firm had secured from the Appellate Assistant Commissioner earlier. By that order, the Appellate Assistant Commissioner had, at the request of the assessee firm, directed the Income-tax Officer to take the losses of the first assessment year into the accounts of the partners, which direction, in the opinion of the Appellate Assistant Commissioner, his predecessor had omitted to make in the first instance. It was after this that fresh assessment forms were drawn up, and the refund was determined. It may be pointed out here that the partners withdrew the amount of refund, though in making the request to the Additional Income-tax Officer the assessee firm had reserved its right " to move further in the matter as may be advised", and had pointed out that the action was without prejudice to such rights.

Having failed to obtain relief from the Department, the appellate authorities and the Central Board of Revenue, tqe assessee firm filed the petition under Art. 226 of the Constitution in the High Court of Judicature at Bombay. That petition was heard by Tendolkar, J., and he declined to interfere mainly on the ground that it was possible to take two views of the matter whether after a profit assessment was turned into a loss assessment by the Appellate Assistant

z959 Commissioner, the original order of the Income-

M/ 5

P , d tax Officer under s. 23(5)(b) remained outstanding or s. aru c11an .

Hukamchand & co. not.

He thought that this was not a fit case for the

v. issuance of a writ of mandamus by the High Court. In Union of India appeal which was taken from this decision, Chagla,

& Others C. J., looked at proviso (d} to s. 24(2), and also came to the view that there was a possibility of two views Hidayatullah ] . being taken in the matter, and that the learned single Judge was right in not interfering. Shah, J., in a _concurring judgment, explained what he considered was the meaning of s. 23(5)(b) read with s. 24(2), proviso (d}, but he also felt that this was not a case in which a writ could be claimed against the Union of India or the Income-tax Officers.

Chagla, C. J., however, expressed the hope that the taxing authorities would not deny the assessee firm its rights under the Act on any technical ground, such as limitation, or failure to pursue a particular procedure. In the result, the Divisional Bench sustained the order of Tendolkar, J., who had dismtssed the petition earlier.

This Court on May 3, 1954, granted special leave to appeal against the judgment of the Divisional Bench: Before arguing on merits of the appeal, the leamed Additional Solicitor-General and subsequen_tly Mr. Rajagopala Sastri who took over the argument, raised three objectiol)s to the present appeal. According to them, the petition in the High Court was directed against the Union of India and the two Income-tax Officers who had dealt. with this matter, and the relief which was claimed could be granted by none of them. They further argued that mandamus was an inappropriate writ to issue in this matter, when the order passed by the Income-tax Officer under s. 23(5)(b) was not appealable and the Appellate Assistant Commissioner could do nothing about it in the appeal against the quantum of assessjllent. They also stated that the relief asked for in the petition could not be granted by the High Court, and that the powers of this Court were accordingly limited.

We shall deal with these objections, when we have determined the essence of the matter. Under s. 23(5)(b), a power is conferred on the Income-tax Officer to treat an unregistered firm as a registered

(2) S.C.R. stti>REME COURT REPORTS 993

firm, if by adopting that method more tax and superz~59 tax would be realisable from te individual partners M/s. Sarupchand in their own assessments than In assessing the firm. Hztkanichand &- co.

The clause may be quoted in extenso for ready referv. ence here : Union of India 23(5). "Notwithstanding anything contained in s- Others the foregoing sub-sections, when the assessee is a firm Hidayati<llah J. and the total income of the firm has been assessed under sub-section (1), sub-section (3) or sub-section (4), as the case may be,-

(b) in the case of an unregistered firm, the Income-tax Officer may instead of determining the sum payable by the firm itself proceed in the manner laid down in clause (a) as applicable to a registered firm, if, in his opinion, the aggregate amount of the

tax including super-tax, if any, payable by the partners under such procedure would be greater than the aggregate amount which would be payable by the firm and the partners individually if the firm were assessed as an unregistered firm. ".

The contention of the assessee firm is that the action of the Income-tax Officer in treating an unregistered firm as a registered firm is mainly in the interests of the Revenue and he can act if more revenue would be available and not otherwise.

When an unregistered firm makes a loss, it is entitled to carry forward the loss for a certain number of years till it is absorbed in the profits, if any, of subsequent years. By carrying the loss to the account of the individual partners, relief is afforded to them in their own income-tax payment, and there is presently a loss of revenue to the State. This, according to the assessee firm, is outside the jurisdiction of the Income-tax Officer, because his action is conditioned upon realisation of more revenue and not creating loss for the State.

Learned counsel for the Department agree that there would be, in the ass.essment year in which there is a loss by an unregistered firm, a loss to the Revenue if it is carried into the accounts of the partners; but they contend that there is no inhibition against the

I959: action and refer to proviso (d) to s. 24(2) as indicating

Ml S-P h d that such a course is perfectly valid. The assessee s. aru c an H"kamchand & co. firm also contends that the moment loss was deterv. mined by the Appellate Assistant Commissioner, the Union of India previous order made by the Income-tax Officer under

& Othm s. 23(5)(b) of the Act automatically fell to the ground and the loss could only be carried forward in the Hidayatullah ]. f h uture assessments of t e unregistered assessee firm and not in the account of the partners. The assessee firm contends that the direction by the Appellate Assistant Commissioner to modify the assessments of the three years accordingly implied the re-opening of the entire question whether this unregistered firm could be treated as a registered firm for purposes of assessment in the first yea, r. The Department, on the other hand, refers to the provisions of s. 30 of the Act to show that an appeal lies to the Appellate Assistant Commissioner on the grounds expressly mentioned there and none other. It further points out that this • is not one of the grounds on which the appeal could have been taken, and the Act cannot by implication be deemed to have conferred on the Appellate Assistant Commissioner a power which he ordinarily did not possess under the Act.

The order of the Incometax Officer to treat the unregistered firm as registered must, therefore, be held to be outstanding, and all that has happened in the ease is to take that order to its logical conclusion in the light of the assessed loss of the firm, in the three years under assessment.

This question was argued before us in great detail, as apparently it had also been in the Court below.

There is no doubt that the matter is one of some complexity, which is not unusual in a statute of the type we are considering, but, in our opinion, only one correct view of the matter was possible, and with all due respect, the High Court made but . little attempt to determine it.

We shall now attempt to lay down the interpretation of the various sections bearing upon the matter. Section 23(5)(b) has already been quoted. It will appear from it that the Income-tax Officer is given the option to apply the procedure laid down in cl. (a) to an unregistered firm, if, in his

opinion, the aggregate amount of tax including super~ x959 tax, if any, payable by the partners under such pro- M/s.Sarupchand cedure would be greater than the aggregate amount of Hukamchand.,;. co. tax which would be payable by the firm and the v. partners individually, if the firm was assesseil as an Union of India unregistered firm.

Clause (a) provides that the sum & Others payable by the firm shall not be determined but the Hidayatullah J. total income of each partner of the firm, including therein his share of its income, profits and gains of the previous year, shall be assessed and the sum payable by him on the basis of such assessment shall be determined. To put it simply, in the case of a registered firm its' assessable income is first determined, but is not processed further to determine the tax.

Instead, the shares of the partners in the assessable income are determined in accordance with the particulars furnished by them, and the resultant amounts are respectively carried to each partner's return and included in his income, and the tax on the total is determined. In the case of an unregistered firm, the assessable income is found out, and then the tax payable by the unregistered firm is determined and a demand issued. If there is a loss, then the loss is carried forward to the succeeding years till it is absorbed or for six (now, eight) years but no further.

Previously, the number of years ranged from one to six, but there is no need to refer to the provision in detail.

What happened in this case was that for the assessment year 1940-41, the Income-tax Officer determined the assessable income at Rs. 80,358.

He felt that more tax was likely to be realised if the partners were assessed instead of the firm, nd he accordingly decided to apply the procedure laid down ins. 23(5)(b) to the firm. In passing his order, the Income-tax Officer observed as follows:

" The firm is an unregistered one but the aggregate amount of tax payable by the partners would be greater by applying the procedure laid down in Sec. 23(5)(a) of the Act than the aggregate amount which would be payable by the firm and the partners individually if the firm were assessed as an unregistered one.

I therefore order under Sec. 23(5)(b) of the

'959 Act that the procedure laid down in Sec. 23(5}{a) M/" Sarupchand should be applied and the firm declared N. D. for the Hukamchand & Co. assessment year 1940-41 ".

It is no doubt true that ifthe Income.tax Officer had Union of Indio determined a Joss, he could not and probably would & Others not have passed this order, which would have had Hidayatullah J. the immediate effect of loss to the Revenue of the sums which have now been ordered to be refunded to the partners of this unregistered firm.

The Depart. ment, however, says that the assessment for 1940-41 except in so far as profit was converted into loss has become final and cannot be set aside now. l1; relies on Commissioner of Income-tax, Bombay and Aden v.

Khemchand Ramdas(') and Commissioner of Income. tax v. Tribune Trust, Lahore (2).

There is no doubt that an assessment which has once been made does become final, subject only to the powers exercisable under ss. 34 and 35 of the Act. The position, however, is different when the assessment itself is subject to appeal, and the Appellate Assistant Commissioner passes an order converting the profit into a loss, and gives a direction to the Income-tax Officer to modify the assessment accordingly.

The position then was that the Income.tax Officer had exercised his powers under s. 23(5)(b) as there was a profit. When the Appellate Assistant Commissioner found a . loss it became clear that the Income-tax Officer had, by 1'.n erroneous finding of profit assnmed jurisdiction to act under s. 23(5)(b).

The reversal of the finding of profit destroyed the jlubstratum of the jurisdiction of the Income-tax Officer to act under that clause and his order automatically fell through.

The Department's contention that such an order is referable to cl. (a) of s. 31(3) and does not involve the setting aside of the order under s. 23(5)(b) passed earlier by the Income-tax Officer is not correct.

No doubt, the right of appeal given to the assessee under s. 30 is limited to the matters therein coutained, but the relief which the appellate authority can give is to be found in s. 31(3). The .assessment order having

come before the Appellate Assistant Commissioner, he

(1) [1938] 6 I.T.R. 414.

(2) [1948] 16 l.T.R. 214.

Can: under Cl. (a), Confirm, reduce, enhance Or annul

I959 the assessment. Under cl. (b) he can set aside the M, s-p , d s. aru c11an assessment and direct the Income-tax Officer to make Hukamchand & ca. a fresh assessment, after making such further enquiries v. as the Income-tax Officer thinks fit or the Appellate Union of India Assistant Commissioner directs, and the Income-tax & Others Officer must thereupon proceed to make fresh assess- Hidayatu/lah 1 • ment and determine the amount of tax payable on the basis of such fresh assessment. It is contended by the Department that the order of the Appellate Assistant Commissioner was passed under cl. (a) and not

cl. (b), and there being no fresh assessment ordered, the only thing that the Income-tax Officer could do was to re-determine the tax within the limits of his own order under s. 23(5)(b) of the Act, which applied

cl. (a) of that sub-section to this case.

In our opinion,. this is not a correct approach.

Even if the order be referred to cl. (a) of s. 31(3), the effect, in law, was the annulment of the assessment which had been made in the case, and the necessary consequence of the determinati6n of the loos in the assessable income remained to be worked out. The Income-tax Officer worked it out by carrying the losses to the return of the partners.

Under what section could he do so except under s. 23(5)(b)? There was no authorisation under s. 31(4) of the Act and the second proviso to s. 24 was clear.

In such a case, the Income.tax Officer was required once again to apply his mind to determine whether it would be in the interests of Revenue to proceed, as he had done before. It is manifest that if he had done this duty in the interests of the Revenue, as the law indeed contemplates, he would never have passed the order that the loss of the firm should be carried to the accounts of the partners immediately in that year of assessment. Learned counsel for the Department admits that no Income-tax Officer would have, with a loss by the fitm, given relief on the basis of that loss to the partners, but he contends that this is not illegal in view of the special provisions of proviso (d) to s. 24(2) of the Act.

We accordingly proceed to consider the effect of that proviso, which reads as follows:

r959 " Provided that-

M s. sarnpchand

(d) where an unregistered firm is assessed as a Hnkamchand ,, co. registered firm under clause (b) of sub-section (5) of

Section 23, during any year, its losses shall also be Union °! India carried forward and set off under this section as if it

& Othm were a registered firm''.

Hidayatullah J.

From this, it is argued, as it was argued in the High Court, that even the losses of an unregistered firm can be carried to the partners' account, as if the firm were registered. .No doubt, if the proviso is read in an extended manner, the result asked for would follow ; but a careful reading of it would show that it was not designed to enable the Income. tax Officer to forego the obligation laid on him by cl. (b) of s. 23(5), to find out the interests of the Revenue. To read this proviso as enabling the Income-tax Officer to overlook the said clause is to give no meaning to the words " during any year ".

Those words form a material part of the proviso, because the proviso with or without those words makes an entirely different sense.

Without those words, it gives a general power to carry the losses to the partner's account. With those wlilrds, it OJ; ily provides for a contingency in which an unregistered firm treated as such in the previous years, is sought in any particular year to be treated as a registered firm, and by reason of its carrying some business losses in the past, arrangement for the carrying forward and absorption of those losses has to be made for the ye:i, r in which it is to be treated as a registered firm. In that event., the proviso provides that its losses shall be carried to the partners' account, as if it were a registered firm. It is inconceivable that if the firm was carrying heavy business losses, it would suddenly be treated in a year of assessment as a registered firm, so that its losses might give relief to the partners and not give revenue to the State. This proviso would only be resorted to, when in spite of taking the losses to the accounts of the partners, more revenue would be available to the State. The proviso is an enabling one.

An unregistered firm, treated as such in previous years, may, during any year, be treated as a registered firm provided the Revenue would

benefit. It may be that the firm may have made a x959 loss in that year or was carrying a loss from the pre- M/ 5

P 1 d vious years but, if by treating the firm as registered, Huk:;,, c~::ac ;~0• the Revenue would be benefited, the proviso can be v. used. But there is no general power to act this way Union of India to the detriment of the Revenue. To give any other &- Others interpretation to this proviso will mean that the words Ilidayatullah J. "during any year" have not received any meaning and that the proviso is interpreted to make it not incumbent on the Income-tax Officer to consider the interests of the Revenue, as required by cl. (b) of s. 23(5).

The two provisions must be read in harmony, and when so read, yield the only result that proviso (d) is to be invoked, subject to the conditions under s. 23(5)(b) to obtain more .revenue for the State by applying s. 23(5)(a).

It would appear, therefore, that the Income-tax Officer in the light of the losses determined by the Appellate Assistant Commissioner, was under a duty to apply his mind de novo to the problem which he had undertaken, when he resorted to s. 23(5) tb). It is admitted that if the matter had been so plain to him, he would not have, if he did his duty correctly under that provifiion, carried the losses to the partners' account.

The only question, therefore, which survives for determination is whether the order of the Appellate Assistant Commissioner left the Income-tax Officer free of his earlier order, and whether he was under a duty to reconsider the position under s. 23(5) (b).

When the basis for assessing a profit was gone, it is manifest that there was nothing but.loss to carry forward to the partners' account.

With the fall of t~ assessment in this manner, fell the need for applying the special provisions of cl. (b) of s. 23( 5) to the case.

Indeed, the duty of the Income-tax Officer indicated a contrary course, if he was to act under s. 23(5) (b) at all. The order of the Appellate Assistant Commissioner was passed in respect of three years' assessment, and was a consolidated order. He set out in parallel columns the income and losses of the firm and not of the partners and directed the Income-tax Officer to

" 1000 SUPREME COUR'r REPORTS [1959j Supp.

'959 modify the assessments accordingly. The intention M/ 5-P h d obviously underlying that order was to put the matter

Huk~,,,,~;;:,,; ;'.~0 • at the stage at which the assessable income of the v. assessee firm was determined before computing the Union of India tax thereupon. To compute the tax, the Income-tax

& Others Officer had to determine whether the loss occasioned in the first year should be carried forward to the Hidayatullah ]. assessee firm in the subsequent year, and he could not give effect to the order of the Appellate Assistant Commissioner fully, unless he determined once again the question under s. 23(5) (b). In other words, the implication of the appellate order was to take the matter prior to the order regarding the treatment of the unregistered firm as a registered firm, and of necessity, that order.fell to the ground as being passed beyond that stage.

It is contended on the strength of thB ruling of the Privy Council in Commissioner of Income-tax v. The Tribune Trust, Lahore (1) that once the assessment is final and valid, it remains so until it is set aside, but once it has become final, it cannot be altered except under ss. 34 and 35.

No exception can be taken to the statement of the law by the Privy Council, which, with all due respect, is absolutely correct, but it is impossible to hold, on analogy, that the order determining that this unregistered firm should be treated as registered, had equally become final and not open to further consideration. Learned counsel for the Department also urged on the strength of Commissioner of Income-tax v .. McMillan & Go. (2) and Commissioner of Income-tax v. Amritlal Bhogilal & Go. ('), that if the powers of the Appellate Assistant Commissioner '1id not involve a review of the determination .by the Income-tax Officer under s. 23(5) (b), this result could not indirectly follow. No dou ht, the Appellate Assistant Commissioner could not, if the matter had gone before him in appeal against the order under' that section, have interfered. But the Appellate Assistant Commissioner was exercising his powers under s. 31 of the Act and annulling the assessment

(1) [1948] 16 LT.R. 214.

(2) [1958] 33 LT.R. 182.

(3) [1958] 34 LT.R. 130.

of the first year and converting a profit in that

I959 year into a loss.

None can deny that he had that - h h 1 h' h b .c h' S t' Mjs. Sarupc and power m t e appea w IC was e1ore im. ec 10n Httkamchand &o co. 31(4) of the Act enjoins that where as the result of an v. appeal any change is made in the assessment of a Union of India firm, the Appellate Assistant Commissioner may &o Others authorise the Income-tax Officer to amend accordingly any assessment made on any partner of the firm. This Hidayatullah f. power was implicit in the order which the Appellate Assistant Commissioner passed, namely, that there was a loss in the assessment year in question and the assessments for the three years had to be modified.

The Income-tax Officer therefore was under a duty to modify the assessments of the partners accordingly, and to take the matter up again from the point at which the order of the Appellate Assistant Commissioner had placed it. He had once again to determine whether he would, in the altered circumstances, apply s. 23(5)(b) to this case or not.

In our opinion, the Income-tax Officers in question did not do their duty as required by law, and we should, therefore, by a writ compel them to do so.

As regards the argument that the petition is directed against wrong persons and for a wrong relief, we do not think that it is so. The petition sought relief against the Union of India, which, in any event, was not concerned with this matter, and was wrongly joined. But the two Income-tax Officers who dealt with this matter, were required under the statute to do their duty once again in the matter of the application of s. 23(5) (b) of the Act. That they failed to apply their mind to this matter under a wrong apprehension of the law is manifest, and they did not give effect to the orders of the Appellate Assistant Commissioner. The assessee firm having failed to secure this relief from all the authorities superior to the Incometax Offics, it was open to the High Court by a writ '; to order the Income-tax Officer concerned to hear and determine this matter in accordance'with law.

This is precisely the relief which was claimed in the High Court and is now claimed in the present appeal.

I959 think, with due respect, that the High Court should M/s. sarupchand have, on a correct appraisal of the legal situation, Hukamchand & Co. ordered this relief, and we accordingly, after explain- . v. . ing the law applicable .to the case, order the approunion ;~India priate Income-tax Officer to hear and determine this

& ' "' matter i.n the light of our observations.

Hidayatullah J.

We may set down here that the two partners of the firm to whom relief has been given by way of refund after the Appellate Assistant Commissioner's order undertook unconditionally to refund the amounts, before the matter is considered by the Income-tax Officer.

We order that the two partners shall return the amounts in the manner to be ordered by the Income-tax Officer, before action is taken to determine the matter.

I959

May 5.

In the result, the appeal is allowed with costs throughout to be paid by respondents 2 and 3. The Union of India shall, however, bear its own costs. It may be noted that no separate costs were incurred by it either in this Court or in the Court below. It joined respondents 2 and 3 in the statement of the case filed in this Court and also appeared through the same counsel in both the Courts.

Appeal allowed.

THE INDIAN OXYGEN & ACETYLENE CO.,

PRIVATE LTD., BOMBAY v.

ITS WORKMEN & ANOTHER

(S. R. DAS, c. J., N. H. BRAGWATI, s. K. DAS, P. B. GAJENDRAGADKAR and K. N. V\TANOHOO, JJ.)

Industrial Dispute-Bonus-Full Bench formullt, if can be disregarded-Rehabilitation, claim for-Average life, calculation of -Method of Weighted Average-Exhmtsted Assets-Whether can be taken into account.

The workmen claimed bonus for the years r952-53 and r953-54. The employers contended that on a proper working

./ (

M/S. SARUPCHAND HUKAMCHAND & CO

UNION OF INDIA AND OTHERS

S. R. DAS

N. H. BHAGWATI

M. HIDAYATULLAH, JJ.

Income-tax Act

SS. 23(5)(b), 24(2)(d)

s. 23(5)(b)

s. 35

s. 23(5)(b)

Art. 226

s. 23(5)(b)

s. 23(5)(b)

Income-tax Act

s. 31(3} or under cl. (b)

s. 24(2)

s. 23(5)

s. 23(5)(b)

s. 24(2)

s. 23(5}(b)

s. 23(5)(a)

s. 23(5}(b)

s. 31

s. 3

s. 23(5)(b)

Art. 226

s. 23(5)(b)

Income-tax Act

s. 26A

s. 31

s. 35

s. 23(5)(b)

Art. 226

s. 23(5)(b)

s. 24(2)

s. 23(5)(b)

s. 24(2)

s. 23(5)(b)

s. 23(5)(b)

s. 24(2)

s. 23(5)(b)

s. 30

Section 23(5)(b)

Sec. 23(5)(a)

Sec. 23(5)(b)

Sec. 23(5}{a)

ss. 34 and 35

s. 23(5)(b)

s. 23(5)(b)

s. 31(3)

s. 23(5)(b)

s. 30

s. 31(3)

s. 23(5)(b)

s. 31(3)

s. 23(5)(b)

s. 31(4)

s. 24

s. 24(2)

Section 23

s. 23(5)

s. 23(5)

s. 23(5)(b)

s. 23(5)(a)

s. 23(5)

s. 23(5)

s. 23( 5)

s. 23(5)

s. 23(5)

ss. 34 and 35

s. 23(5)

s. 31

s. 23(5)(b)

s. 23(5)