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TMI Blog1964 (5) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... cessarily incurred in the performance of the duties of an office is a question of fact and in regard to a finding on it the only question of law that can possibly arise is whether there was any material which could justify it. The question referred to us is whether on the facts and in the circumstances of the case the amount was exempt under section 4(3)(vi) of the Income-tax Act. The facts and circumstances of the case include the findings of fact because they are binding upon us. In view of the finding of fact recorded by the Tribunal the question must be answered in the affirmative. I reserve my opinion upon the question whether section 4(3)(vi) does not require that the special allowance must have been granted after the expenses have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of profit. The Income-tax Officer, however, rejected the claim and treated the balance of ₹ 54,956 as remuneration allowed to the assessee for managing the retail shop. The Income-tax Officer came to this conclusion on the finding that the amount received by the assessee bore no relation to the expenses to be borne by it over the management and advertisement charges. He found that the allocation of the amount to the assessee depended upon the net profits earned by the Kanpur Cotton Mills, which fluctuated from year to year, that the expenses borne by the assessee over management and advertisement remained fairly constant through the years and did not vary with the profits earned. No written agreement setting out the terms a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls to the assessee for the purpose of meeting the expenses of managing and running the retail cloth shop. If the true scope of section 4(3)(vi) is to provide for the exemption of an amount paid to an assessee for the purpose of meeting expenses incurred in the performance of the duties of his office or employment of profit, without regard to the amount of expenditure actually incurred by the assessee, there can be no dispute that the instant case would be covered by that provision. But learned counsel for the Commissioner contends that in order to enjoy the benefit of section 4(3)(vi) the assessee must establish that not only has it received the amount as a special allowance, benefit or perquisite but that the amount of the grant was equal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. It may also be that while the grant is made in one year in the expectation that part at least of the expenses will be incurred in that year, the assessee may, because of the exigencies of business and of circumstances beyond his control, find that the expenses cannot be incurred at all until the next year or thereafter. It is not suggested that section 4(3)(vi) must be confined to an allowance which has been granted to meet expenses already incurred. It may also include an allowance granted for the purpose of meeting expenses contemplated at some future time. There is nothing to suggest that the words expenses incurred must mean only expenses incurred already and ascertained . An employer, in his wisdom and experience and having regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of meeting expenses incurred or to be incurred by the recipient in the performance of his duties. Nowhere in the language of section 4(3)(vi) do I find any indication as to the amount of the special allowance, benefit or perquisite which will be exempted. It is true that an employer may make a grant of this kind estimating approximately what its amount should be, and it is open to the legislature to grant an exemption in respect of an amount less than the amount of the grant. Although the amount granted may depend upon the estimate made by the employer, the legislature may say that the entire amount of grant will not be exempted but only that portion of the grant which is actually spent by the recipient. For that, adequate language ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the amount received by the assessee, who it seems was the predecessor of the assessee before us, as sole selling agent of the Kanpur Cotton Mills was liable to be treated as the profits of a business. The court found that what was received by the assessee was received by it as an employee and, therefore, fell to be treated as salary paid to the assessee and accordingly was outside the scope of the Excess Profits Tax Act. To the extent, however, that the expenditure of the selling agency business was met from the grant received by the assessee, the court held that the profits of the selling agency business were liable to be increased for the purpose of the excess profits tax assessment. The provisions of section 4(3)(vi) did not fall for c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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