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TMI Blog1962 (2) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... e case is an allowable one under section 10(2)(x) or 10(2)(xv) of the Act?" Sri D.R. Venkatesha Iyer, the learned counsel for the assessee, did not avail of the assistance of section 10(2)(x). He conceded that that provision may not be applicable to the facts of the present case. Therefore, we have confined our attention only to the scope of section 10(2)(xv) of the Act. The material facts of the case are as follows: The assessee was carrying on banking business with head office at Bangalore. It had one branch at Malleswaram and another at Shimoga. The branches at Malleswaram and Shimoga were closed in or about the middle of the year 1955. On 24th December, 1955, the following special resolution was passed: "That the Mysore S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade and therefore that payment must be considered as having been made "for the purpose of such business". We shall first examine the contention whether there was any legal liability on the part of the assessee to make the payment in question? From the resolution above noticed, it is clear that the payment in question was made for compensating the employees and the ex-employees whose services had to be dispensed with as a result of the closing of the bank. Sri Iyer did not invite our attention to any provision of law in force at the relevant time, under which the assessee was required to compensate the employees whose services the assessee had to dispense with, as a result of the closure of the bank. He contended that as a master, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bona fide closure of business. Section 25-FFF was introduced into the Industrial Disputes Act with a view to get over the effect of the above decision. That provision was given retrospective effect to some extent. The scope of section 25-FFF was considered by the Supreme Court in Hatisingh Manufacturing Co. Ltd. v. Union of India [1960] 3 S.C.R. 528; A.I.R. 1960 S.C. 923 and other connected cases. Therein Shah J., who delivered the judgment of the case, observed: "It is true that the Amending Act which has introduced section 25-FFF was passed in June, 1957, and liability to pay compensation arises in respect of all undertakings closed on or after November 28, 1956. But, if liability to pay compensation is not a condition precedent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court observed: "This section (section 10(2)(xv) of the Act) though it enacts affirmatively what is stated in the negative form in the English statute, is substantially in 'pari materia' with the English enactment...." It was also observed therein: ".....a court in India will be justified in considering the English authorities as aids to the interpretation thereof." The scope of the words "any disbursements or expenses not being money wholly and exclusively laid out or expended for the purpose of the trade, profession or vocation" came to be considered by the King's Bench in Commissioners of Inland Revenue v. Anglo Brewing Co. Ltd. [1925] 12 Tax Cas. 803 Interpreting those words, Ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawing a salary of ₹ 6,000 a year, but later it was increased to ₹ 10,000 a year. He ceased to be the director-in-charge in September, 1938, and since then he was working merely as an ordinary director. The assessee decided to go into voluntary liquidation with effect from 30th September, 1941, and the actual order of dissolution was passed on 8th December, 1941. From 1st October, 1941, the assessee's business was taken over by a new public company. The assessee's board of directors by their resolution dated the 2nd February, 1942, approved and confirmed the payment of a sum of ₹ 10,000 to C in recognition of his past services to the assessee and this sum was debited to the assessee's profit and loss account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances, without any further facts justifying the payment, it is not possible to hold that the expenditure was wholly and exclusively for purposes of the business of the company." It is true, as contended by Sir D.R. Venkatesha Iyer, that this case is not exactly on the point under consideration by us. But the ratio of the decision is of some assistance in finding out the true scope of section 10(2)(xv). The next case to which reference was made at the Bar during the hearing of this reference is Inderchand Hari Ram v. Commissioner of Income-tax [1953] 23 I.T.R. 437; A.I.R. 1953 All. 683. Therein their Lordships observed that: "In considering, however, whether the expenditure can be deducted as business expenditure, it must ..... X X X X Extracts X X X X X X X X Extracts X X X X
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