1988 (6) TMI 17 - HC - Income Tax

Summary

Issues Involved:
The judgment involves multiple issues including the admissibility of pension payments as business expenditure, entitlement to higher rebate on machinery installation, claim for development rebate on tube-well, and treatment of cash allowance for tax purposes.

Admissibility of Pension Payments:
The case involved a manufacturer and dealer claiming pension payments to a deceased employee's widow and a retired employee as business expenditure. The Income-tax Officer initially disallowed the amounts as gratuitous, but the Appellate Assistant Commissioner and the Appellate Tribunal allowed the deductions citing commercial expediency and past practices. The Tribunal upheld the decision based on the resolution and commercial expediency, following the principles laid down by the Supreme Court regarding pension payments.

Higher Rebate on Machinery Installation:
The Tribunal considered whether the assessee was entitled to a higher rebate on newly installed machineries for manufacturing automobile ancillaries, including those used in assembling cars. The court referred to previous decisions in favor of the assessee and answered the question affirmatively.

Claim for Development Rebate on Tube-Well:
The Tribunal assessed whether the claim for development rebate on a tube-well for the relevant assessment years was justified. The court relied on a previous decision in favor of the assessee for the assessment year 1971-72 and answered the question in the affirmative.

Treatment of Cash Allowance:
The final issue concerned the treatment of cash allowance paid to employees by the assessee-company for the assessment year 1971-72. The court followed a previous decision and ruled in favor of the assessee, stating that the cash allowance should not be taken into account for tax purposes.

The judgment, delivered by Judges K. M. Yusuf and Ajit Kumar Sengupta, addressed various legal issues including pension payments, rebate on machinery installation, development rebate on tube-well, and cash allowance treatment, providing detailed reasoning and references to past decisions to support the conclusions reached.