9911796707
TMI Blog1965 (7) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... are here concerned with the assessment year 1956-1957, the relevant previous year being the financial year ending 31st March, 1956. The assessee derived income from various sources including salary for the services rendered by him to the Sanghi Brothers, 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 quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, after stating the case, has referred to us the following question on this aspect of the case: "Whether, on the facts and circumstances of the case, the special allowance of Rs. 8,400 received by the assessee from Messrs. Sanghi Bros. Pvt. Ltd. is taxable 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 4(3)(vi) it becomes clear that the said allowance specifically granted to an employee to meet the expenses wholly and necessarily incurred by him in the performance of his duty as an employee would be his income unless he established that the special allowance 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n support of his bald statement, " This sum is spent by the managing director ". This being the position, in our opinion, the income-tax authorities as well as the Tribunal were justified in including the said amount of Rs. 8,400 in the total income of the assessee. 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 permis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt to Shri Sanghi for the purpose of paying out commission to secure business for them. The expenditure incurred by the assessee, therefore, was laid out wholly and exclusively for the purpose of the said business. But as we have pointed out the purpose for which the employer pays an amount to his employee is not sufficient to entitle the employee to claim a deduction of the said amount, in the absence of any proof tendered by him that he had in fact expended the allowance on the purpose for which it had been paid to him. For these reasons, in our opinion, the first question will have to be answered against the assessee. In the result, our answer to the first question is in the affirmative. Mr. Mehta has not pressed the second question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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