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TMI Blog1970 (3) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case, the sum of Rs. 35,845 incurred in aiding the prosecution in the riot case could be said to be expenditure allowable under section 10(2)(xv) ? " The assessment year under reference is 1961-62, the relevant accounting year being the year ended 30th June, 1960. Under an award of the Industrial Tribunal (Colliery Disputes), given some time in May, 1950, the assessee was liable to pay to its workers at the colliery their wages fortnightly instead of weekly. The assessee implemented the award. Some of the workmen, however, insisted that the assessee should revert to its former practice of making payment of wages weekly. Certain conciliation proceedings followed thereupon and in the course of a meeting before the conciliation officer held on 12th April, 1957, the assessee agreed to make payment of wages and advances weekly, subject to certain just adjustments by way of deduction of excess payments already made. The assessee started making payment according to that agreement. In May, 1957, it was discovered that there were certain excess payments made already and accordingly on the 8th of June, 1957, on which day the advances were to be adjusted and excess paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s expense. The case was heard before the Magistrate from 21st August, 1958, and he made an order on the 30th December, 1958, committing the accused to the Sessions Court. The trial in the Sessions Court started on 2nd April, 1958, and lasted till 22nd July, 1959. The Sessions Court passed its order on 18th September, 1959, acquitting all the accused. The assessee incurred costs, being legal costs, in connection with giving legal assistance to the State prosecutor. A part of the costs was incurred in the accounting year ended 30th June, 1959, the relevant assessment year being 1960-61 and the rest in the accounting year ended 30th June, 1960, being the year relevant to this reference. The assessee claimed the amounts of those costs as a deduction under section 10(2)(xv) in respect of each of these two years. In respect of the first year the Income-tax Officer disallowed the assessee's claim for deduction, but the same was allowed in appeal by the Appellate Assistant Commissioner. In respect of the second year, being the year relevant to this reference, the Income-tax Officer disallowed the claim, the Appellate Assistant Commissioner on appeal allowed it, but finally the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That case was a case for a deduction under section 12(2) and not under section 10(2)(xv). But in so far as the case before us is concerned, the principles laid down by the Supreme Court in connection with section 12(2) would equally apply to considerations under section 10(2)(xv). The distinctions which exist between the provisions of the two sections do not make any difference in so far as the case before us is concerned. Only one of the four principles pointed out by the Supreme Court which is relevant to the case before us is : " It is enough to show that the money was expended 'not of necessity and with a view to a direct and immediate benefit to the trade, but voluntarily and on the ground of commercial expediency, and in order indirectly to facilitate the carrying on of the business '." The principle, therefore, is that in order that the expenditure may be allowable as a deduction, it need not have been incurred with the object of gaining a direct and immediate benefit and that it would suffice even if it was incurred in order indirectly to facilitate the carrying on of the business. Another judgment of the Supreme Court relied upon by Mr. Kolah is the judgment in Sree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e laid out wholly and exclusively for the purpose of a business even though the object of incurring the expenditure may be indirectly connected with the business, though not directly, but if the connection between the object for which the expenses have been incurred and the purpose of the business, viz., to earn profits, is remote, it would not be a permissible deduction under section 10(2)(xv). The distinction between connection which is indirect and one which is remote is clear. The making of such distinction may not always be easy as facts would vary from case to case. No reference of decided cases would be helpful for finding out how the principle was applied to the facts of that case. The principle has to be applied to the facts of every particular case. Now, in this case, immediately before the manager was stabbed, the manager had actually conceded the demands of the workmen that the payments should be made to them without any deduction. Nonetheless, as emotions had keyed up to a high pitch, the workmen created a riot and as many as twenty-five stab wounds were inflicted on the manager. It was a serious matter of law and order. But it was more serious for the assessee. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to be to bring the perpetrators of the crime to book and thereby produce a wholesome and disciplinary effect on labour in general and an atmosphere conducive to prevent recurrence of riots in future and to bring about a smooth and normal running of the colliery. The letter states that after the riots had broken out the assessee had to declare a lock-out which resulted in a heavy loss in earnings and the assessee would have been put to a greater loss if necessary steps had not been taken to prevent the recurrence of riots. The direct object of the assessee was that the real offenders must be punished. But the very concept behind the law under which the offenders are punished is that the punishment may act as a deterrent against repetition of such crimes for which the punishment is awarded. The punishment would act as a deterrent not only against the offender or offenders who are punished, but also against others against committing such crimes. In the case before us it was not a minor incident or a minor offence. A large number of persons were involved in the riot. Serious injuries were inflicted. The injuries were inflicted by stabbing. The manager of the assessee succumbed to hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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