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TMI Blog2018 (4) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... on that a resolution was passed by the Respondent Board and came to the conclusion that the payment given to the widow of Mr.K.R.Sundaram is purely discretionary and not a pension. There is a resolution, which has been passed by the Board of the Assessee company recognizing the service rendered by Mr.K.R.Sundaram for over 30 years. The Commissioner of Income Tax (Appeals) while considering the decision in the case of Lucas Indian Service Ltd.[1997 (2) TMI 23 - MADRAS High Court ] has made a hair-splitting exercise of the facts of the said case and sought to distinguish the judgment by observing that initially there was a resolution passed, which was modified by another resolution granting pensionary benefit to the employee and thereafte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er month paid to the widow of the Managing Director of the company, who passed away is allowed as a deduction 4.The facts leading to the filing of the appeal are as follows: The respondent Assessee was established during the year 1970 and at the time of inception one Mr.K.R.Sundaram joined the respondent Assessee as General Sales Manager, he was promoted to the post of General Manager in the year 1979 and further promoted as Managing Director of the Company in 1988 and while he was functioning as Managing Director of the Company, he died in harness during September 1998. The Assessee company took into consideration the service rendered by Mr.K.R.Sundaram in developing the company, which initially started with one branch and on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n service and does not mean that while on duty. This erroneous interpretation has led to an erroneous Assessment Order. Unfortunately, the CIT (A) also did not take note of the factual position that a resolution was passed by the Respondent Board and came to the conclusion that the payment given to the widow of Mr.K.R.Sundaram is purely discretionary and not a pension. The question would be whether the board of Respondent company could pass a resolution granting payment in the nature of pension to the widow or legal heirs of the employee as there should be a pension scheme in place for effecting such payment to treat such payment as business expenditure. This has been answered in Commissioner of Income Tax Vs. Lucas Indian Service Ltd. repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would promote good relationship between the employer and employees. We are of the view that the payment was made on the ground of commercial expediency. 10. Considering the development in law in the payment of family pension, the Gujarat High Court in CIT Vs. Laxmi Cement Distributors (P) Ltd., (1976) 104 ITR 711 (Guj) held as follows (headnote): The payment of family pension or gratuity to the dependants of a deceased employee is now a recognized concept in the field of employment and it has received statutory recognition. It cannot any longer be treated as a bounty or a philanthropic gesture actuated by compassionate objective. Even if such payment is not provided for by any scheme or contract of employment or otherwise, a dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployee of getting the pension. Further the pension was made out of commercial consideration and in order to facilitate the carrying on the business smoothly. It is well-settled that the tests laid down by the Supreme Court are independent and alternative and on satisfaction of any one test, the payment can be treated as a permissible deduction. 6. In the case on hand also, there is a resolution, which has been passed by the Board of the Assessee company recognizing the service rendered by Mr.K.R.Sundaram for over 30 years. The Commissioner of Income Tax (Appeals) while considering the decision in the case of Lucas Indian Service Ltd., has made a hair-splitting exercise of the facts of the said case and sought to distinguish the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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