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TMI Blog1984 (8) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case, pounds 589 claimed as loss was only a notional loss for the assessment year under consideration ? 3. Whether, on the facts and in the circumstances of the case, the marriage allowance paid by the assessee to its employees was part of the salary and did not constitute perquisite for the assessment year under consideration ? 4. Whether, on the facts and in the circumstances of the case, the car allowance paid by the assessee to its employees was of a perquisite to be taken into consideration for computing the disallowance, if any, to be made under section 40A(5) of the Income-tax Act, 1961, for the assessment year under consideration ? 5. Whether, on the facts and in the circumstances of the case, the expenditure incurre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... core Tea Holdings Ltd. ceased to be the managing agent of the assessee. The Ceylon Tea Plantations Holdings Limited was thereupon appointed as the managing agent of the assessee. Consequent on this change, three members of the board of directors of the assessee submitted their resignation with effect from June 2, 1972, and left India for Britain. Before they left India, but subsequent to their decision to resign, the assessee at the meeting of its board of directors held on June 5, 1972, resolved to pay each of the three directors pounds 3,000, pounds 4,250 and pounds 3,000, respectively, as "compensation for loss of office" (see annexure A). The total sum thus paid was pounds 10,250. The assessee claimed this sum as an expenditure laid out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pay compensation was subsequent to the agreement of the three directors to resign from the Board with effect from June 2, 1972. The amounts were paid as compensation for loss of office. There is nothing to show in annexure A that the compensation was paid following a prior understanding with the three directors, as an inducement to resign. There is no suggestion that, but for the compensation paid, the three directors would not have resigned. In such circumstances, can it be said that the expenditure incurred was wholly and exclusively for the purposes of the business of the assessee ? There is no evidence and the assessee made no attempt to adduce any to show that the expenditure was incurred in the process of strengthening or pruning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the instant case do not suggest that there was any attempt on the part of the assessee to reduce expenditure by retrenching superfluous employees. There is nothing to suggest that the three directors resigned involuntarily. On the other hand, the finding of the AAC, to which the Tribunal did not demur, is that the three directors voluntarily resigned their offices. The assessee had at no stage induced or encouraged or compelled them to resign. There is nothing to show that the amounts paid were consequent upon an earlier decision, that is, before the three directors decided to resign. The resignation of the three directors has not resulted in any saving of expenditure, for in their places three new directors have been appointed. In ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject, cannot be said to have had any bearing on the interest of the business of the assessee. That the transaction effected was with the sole or main intention of promoting the interest of the assessee and was so intrinsically and intimately connected with the function of the new managing agency in relation to the business of the assessee, was a matter on which evidence should have been at the very first opportunity adduced by the assessee. The assessee is not justified in saying that, although it did not do its duty at the beginning, it ought to be given a chance to do it now. It was such a claim of the Revenue in Craddock (H.M. Inspector of Taxes) v. Zevo Finance Co. Ltd., [1946] 27 TC 267, 277 (HL), that was rejected outright by Lord Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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