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TMI Blog1981 (11) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the sum of Rs. 63,880 was a proper deduction ? " We have, therefore, to turn to the order of the Tribunal and advert to their findings first. The assessee in this case is a printing press at Sivakasi. The press has a labour force of 77 workmen. In 1971 the assessee brought about an agreement with these people. Under the terms of the agreement, all the employees working in the press were to be treated as having been discharged on March 31, 1971, in consideration of the payment made to them calculated at the rate of I 5 days' wages for every completed year of service. However (this was also an important term in the agreement), all the 77 workers, although deemed to have been discharged on March 31, 1971, must, nevertheless, be trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " would certainly enthuse the employees to proper work and operate as an incentive ". The Tribunal then quoted the well-known dictum of Viscount Cave in Atherton's case [1925] 10 TC 155 (HL) and held that the assessee's claim to deduct the expenditure was allowable as " a payment on account of commercial expediency for the purpose of business". In this reference at the instance of the Income-tax Department, the wisdom of the Tribunal's decision is questioned. Mr. Jayaram, the Department's standing counsel, wondered whether there was any element of commercial expediency in the payment of Rs. 63,880 which the assessee distributed to its workers. Learned counsel said that it was quite odd that a considerable sum should have been given away, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the exigencies of each situation as it arises. Provided there is no non-business motivation, fairly anything that furthers the business must be accepted as a business purpose, and any expenditure which is intended to subserve any such purpose must be deducted as business expenditure. Mr. Jayaraman said that the Tribunal cannot support their determination by a mere citation of the Atherton case [1925] 10 TC 155 (HL), or by an iteration of the stock phrase "commercial 'expediency". We agree with learned counsel that Lord Cave's dictum should not be reduced to mere cliche, but there must, in every case, be an inquiry into the basic commercial purpose of the expenditure claimed. However, " commercial expediency " (like another fine phr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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