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TMI Blog2003 (10) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... eductible as usual u/s 37(1) of the Act. As for learned Commissioner (Appeals) remark that no doubt the employer should be compassionate enough to look after the medical needs of the employees but employer should charge such expenses on account of magnanimity and generosity or charitable/moral grounds to their personal accounts, rather to the revenue , we may only mention that what is taxable to income tax is the income and if, to earn that income, an assessee has incurred business expenses with a sense of compassion for fellow human beings and contribution to the sense of brotherhood in society, those expenses do not cease to be deductible. The minimum one can do, to encourage such kind hearted deeds as appears to have been done by this as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The assessee derives income from professional receipts as a cine artist. One person by the name of Shri Rawat (R, in short) was working with the assessee as a chauffer. It is not in dispute that the salaries and allowances paid to R constitute admissible deduction in the hands of the assessee and that R is in regular and bona fide employment with the assessee. Unfortunately, R s wife became seriously ill and R s limited resources could not have ensured proper medical care for his ailing wife. It was in this backdrop that the assessee decided to step in and foot the medical bill in respect of R s wife. The assessee thus incurred an expenditure of ₹ 2,92,855 towards reimbursing an employee, i.e., R, medical expenses incurred on his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyee and his family. I agree with the argument of Shri Sekhri that the employer should be compassionate enough to look after the medical needs of the employees. However, the employers should charge such expenses on account of magnanimity and generosity or charitable/moral grounds to their personal accounts, rather to the revenue. The expenditure is not allowable as a deduction under the Income-tax Act. Unable to persuade himself to accept the above stand taken by the authorities below, the assessee is in second appeal before us. 5. One thing which is immediately discernible is that the sole and proximate reason for the stand so taken by the authorities below is that the assessee was not under a contractual or legal obligation to reimburse t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ractual point of view, the assessee was required to incur, whether such a cost will be admissible deduction or not. 8. We find guidance from a passage from the judgment of House of Lords in the case of Atherton v. British Insulated Helsbey Cables Ltd. 1925 (10) Tax Cases 155 (HL), referred to with approval by the Hon ble Supreme Court in the case of CIT v. Chandulal Keshavlal Co. (1960) 38 ITR 601, which reads as follows : It was made clear in the above cited cases of Usher s Wilshire Brewery v. Bruce (supra) and Smith v. Incorporated Council of Law Reporting 1914 (6) Tax Cases 477 that a sum of money expended not with a necessity and with a view to direct and immediate benefit to the trade, but voluntarily and on the grounds of commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness. Such expenditure may be incurred voluntarily and without any necessity and if it is incurred for promoting the business and to earn profits, the assessee can claim deduction under section 10(2)(xv) of the Act even though there was no compelling necessity to incur such expenditure. It is relevant to refer at this stage to the legislative history of section 37 of the Income-tax Act, 1961, which corresponds to section 10(2)(xv) of the Act. An attempt was made in the Income-tax Bill of 1961 to lay down the necessity of the expenditure as a condition for claiming deduction under section 37. Section 37(1) in the Bill read any expenditure......laid out or expended wholly, necessarily and exclusively for the purposes of the business or profes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l under section 37(1) of the Act. As for learned Commissioner (Appeals) remark that no doubt the employer should be compassionate enough to look after the medical needs of the employees but employer should charge such expenses on account of magnanimity and generosity or charitable/moral grounds to their personal accounts, rather to the revenue , we may only mention that what is taxable to income tax is the income and if, to earn that income, an assessee has incurred business expenses with a sense of compassion for fellow human beings and contribution to the sense of brotherhood in society, those expenses do not cease to be deductible. The minimum one can do, to encourage such kind hearted deeds as appears to have been done by this assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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