9911796707
TMI Blog1982 (3) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... count of Mr. J. Pol was not for its business purposes and, therefore, not allowable as business expenditure ? " The assessee-company engaged the services of one Shri J. Pol, a Polish technician for the maintenance of some machinery imported by it. He stayed in India from October 21, 1966, to May 20, 1971. For some time the company deducted tax from his salary and ensured that he filed his income-tax returns. However, for the assessment years 1966-67 to 1972-73 the salary of the employee was treated as exempt from tax and accordingly the tax deducted at source, was refunded. When Mr. Pol was about to leave India, he wanted a clearance certificate from the income-tax authorities for which the authorities insisted upon a guarantee in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ductible as business expenditure and the same was added to the income of the assessee. This finding was confirmed by the AAC. The assessee preferred a second appeal to the Tribunal and that appeal was also dismissed. It was frankly conceded by Shri Chitale, learned counsel for the assessee before us, that the salary paid to Mr. Pol was not exempt under s. 10(6)(vii) of the I.T. Act, 1961. The question, therefore, which falls for consideration is, whether, the amount paid by the company in pursuance of the guarantee given by it was a business expenditure allowable under s. 37 of the I.T. Act. An assessee is permitted to deduct expenses laid out or expended wholly and exclusively for the purposes of his business, in the computation of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebt under section 10(2)(xi). The guaranteeing of the loan could not be said to have indirectly facilitated the carrying on of the respondent's business. Nor could it be said that it was in the larger interests of the respondent's business that the guarantee was given." Learned counsel for the assessee invited our attention to the observations of the court at p. 755 of the report that "if the assessee has made payment not voluntarily but to discharge a legal obligation which arose from his business he would be entitled to have the amount deducted as bad debt under s. 10(2)(xi) ", and argued that in the instant case the assessee had discharged a legal obligation for safe return of its expert employee and for that purpose it had to furnish g ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
