9911796707
TMI Blog1965 (7) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... s, Indore, a private limited company, and business. The first question relates to certain special allowance received by the assessee from the Sanghi Bros. in the year of account, in accordance with the resolution dated October 10, 1951, of the board of directors of Sanghi Bros. Limited, and the second question relates to a sum of Rs. 29,500 received by the assessee under an agreement of April 21, 1956, from Shri Jagannath Dhand. It would be convenient to state the facts relating to each question separately. Now, the resolution of the board of directors of Sanghi Bros. Limited of 10th October, 1951, is in the following terms: "Resolved that Mr. S. G. Sanghi, the managing director, be paid a special allowance of Rs. 700 (rupees seven hundre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le in the hands of the assessee as salary income ?" Mr. Mehta, learned counsel for the assessee, has reiterated the same contention of the assessee before us. In support of his contention, he has referred us to certain observations of the Madhya Pradesh High Court in dealing with the reference arising out of the assessment of Sanghi Bros. for the said assessment year. According to Mr. Mehta, the Tribunal was in error in including the said amount of Rs. 8,400 in the total income of the assessee. We find it difficult to accept the contention of Mr. Mehta. Total income has been defined in sub-section (15) of section 2 of the Income-tax Act as " total amount of income, profits and gains referred to in sub-section (1) of section 4 computed in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance received by him specifically to meet the expenses has been expended by him and expenses had been actually incurred by him for the specified purpose. In other words, the special allowance received by an employee from his employer for the purpose of meeting an expense would be in the nature of his income till he actually expends the amount received by him on the specified purpose. If the employee expends the amount in incurring the expenses on the purpose for which the amount has been entrusted to him, then by reason of his so incurring the expenditure the amount received by him ceases to be his income or falls out of his income. Till that time the special allowance received by him retains the character of his income. Now, the resolutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. The decision of the Madhya Pradesh High Court to which our attention was drawn by Mr. Mehta, in our opinion, has no relevance to the question which we have to consider here. The observations on which Mr. Mehta has placed reliance were made by the Madhya Pradesh High Court in a reference arising out of the assessment of the employer of the assessee, Messrs. Sanghi Brothers Limited, Indore. Sanghi Brothers had claimed the said amount of Rs. 8,400 paid to the assessee as a permissible deduction under section 10(2)(xv). The Tribunal had not allowed this claim of Sanghi Brothers. At the instance of Sanghi Brothers a reference was made to the High Court raising a question as to its permissibility. In dealing with this question, the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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