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TMI Blog1988 (6) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... of pension to Smt. Ginni Devi Churiwal and to Sri Mahadeo Maharaj by the assessee-company was an admissible business expenditure under section 37(1) of the Income-tax Act, 1961 ?" The facts relating to this question are stated hereafter : The assessee-company is a manufacturer and dealer in motor cars, trucks, flanges, steel sheet castings, spare parts and also scrap. For each of the three assessment years, the assessee claimed expenditure on account of payment of pension to Smt. Ginni Devi Churiwal, wife of an employee, Shri K. D. Churiwal who died in 1961, and also to a retired employee, Shri Mahadeo Maharaj. The lady was paid pension of Rs. 15,000, Rs. 10,655 and Rs. 7,500 and the other retired employee received pension of Rs. 600 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd of directors of the assessee-company sanctioning payment of pension to Smt. Ginni Devi Churiwal with effect from September 1, 1961. Having regard to the reasons given in this resolution for sanctioning payment of pension to Smt. Ginni Devi Churiwal and on a consideration of the earlier decision of the Tribunal in the appeal for the assessment year 1970-71, with which we respectfully agree, we uphold the action of the Appellate Assistant Commissioner in allowing deduction in respect of the pension payments to these two persons for the three years now under consideration." The short question which calls for determination is whether the expenditure claimed is laid out for the purpose of business and whether it is a legitimate business exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for such payment. It is well settled that the legitimate business needs of an assessee must be judged from the point of view of the business. It is for the assessee to consider the business expediency and whether a particular expenditure should be incurred for the purposes of its business. Provisions for payment of pension to the widow of a deceased employee cannot be said to be either unusual or unnecessary. In CIT v. Indian Molasses Co. (P.) Ltd. [1987] 166 ITR 740, this court held as follows (at p. 757 : "We also accept the contentions made on behalf of the assessee that a provision for payment of pension to the widow of an employee is neither unusual nor unnecessary. Such provisions are in consonance with the modern trend. Employees h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s where an identical question was considered and answered. The decisions are CIT v. Hindusthan Motors Ltd. [1981] 127 ITR 210 and CIT v. Hindusthan Motors Ltd. [1988] 170 ITR 431. Following the said decisions, we answer this question in the affirmative and in favour of the assessee. For the assessment years 1972-73 and 1973-74, the following question of law has been referred : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee's claim for development rebate in respect of tube-well was justified and in that view in granting development rebate on tube-well brought into existence during the previous year relevant to the assessment years 1972-73 and 1973-74?" The controv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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