9911796707
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Issues Involved:
1. Revenue nature of forfeited security deposit. 2. Disallowance of expenditure on eye-camp. 3. Deductibility of pension paid to widow of ex-employee for the assessment year 1967-68. 4. Deductibility of pension paid to widow of ex-employee for the assessment year 1968-69. Summary: Issue 1: Revenue Nature of Forfeited Security Deposit The Tribunal concluded that the sum of Rs. 3,348 forfeited from ex-employees' security deposits constituted a receipt of a revenue nature. The Tribunal found that the forfeited amount was essentially a reduction of the expenditure incurred by the company on training its personnel. The court upheld this view, stating that the forfeited amount should be included in the profit and loss account of the assessee, thus answering the question in the affirmative, in favor of the revenue and against the assessee. Issue 2: Disallowance of Expenditure on Eye-Camp The Tribunal disallowed 50% of the expenditure incurred on an eye-camp organized by the assessee, amounting to Rs. 1,600 out of Rs. 3,205. The Tribunal found that the eye-camp was open to outsiders and there was no data to show that it was primarily for the benefit of the workers. The court agreed with the Tribunal's conclusion, noting that the expenditure was not incurred wholly and exclusively for the purpose of the trade or business of the assessee. Therefore, question No. 2 was answered in the affirmative, in favor of the revenue and against the assessee. Issue 3: Deductibility of Pension Paid to Widow of Ex-Employee (1967-68) The Tribunal found that the payment of Rs. 2,000 to Smt. Durga Devi Khanna, widow of an ex-employee, was entirely gratuitous and not due to commercial expediency. The court referred to the Supreme Court's decision in Sassoon J. David and Co. P. Ltd. v. CIT, which laid down three tests for determining the nature of such expenditure. The court concluded that the payment did not qualify under any of these tests and was not made on account of commercial expediency. Thus, question No. 3 was answered in the affirmative, in favor of the revenue and against the assessee. Issue 4: Deductibility of Pension Paid to Widow of Ex-Employee (1968-69) Similar to the previous issue, the Tribunal found that the payment of Rs. 1,925 to Smt. Durga Devi Khanna was entirely gratuitous and not due to commercial expediency. The court reiterated that the payment did not meet any of the tests laid down by the Supreme Court for determining commercial expediency. Consequently, question No. 4 was also answered in the affirmative, in favor of the revenue and against the assessee. Conclusion: All four questions were answered in the affirmative, in favor of the revenue and against the assessee. No costs were awarded.
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