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TMI Blog1977 (8) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Indian Income-tax Act, 1922?" The facts pertaining to this question lie in a very narrow compass. The question relates to the assessment years 1957-58 and 1958-59. The assessee is a limited company carrying on business of manufacture and sale of sugar. In the respective accounting years relevant to the assessment years 1957-58 and 1958-59, it incurred an expenditure of Rs. 5,902 and Rs. 6,996 on Satyanarayan Mahapooja and claimed those expenses as allowable deduction under s. 10(2)(xv) of the Act in the computation of its income for the respective assessment years. The ITO as well as the AAC rejected the claim on the ground that the expenses could not be regarded as expenditure having been incurred wholly or exclusively for the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mahapooja was merely an occasion but the major expenses were on account of annual dinners that were given to the cane-growers and labourers connected with the working of the mill and such expenses would fall within the category of entertainment expenses incurred by the assessee-company for keeping the labour in good humour so as to induce them to work in the assessee-company in the following seasons and as such the expenses should be regarded as motivated by commercial or business consideration and that, therefore, they would be allowable as a deduction under s. 10(2)(xv) of Act. Reliance was placed by Mr. Munim upon a decision of the Gujarat High Court in the case of CIT v. S. L. M. Maneklal Industries Ltd. [1977] 107 ITR 133. It is imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-sheet under that head. Obviously, the assessee did not consider them as labour welfare expenses. On the facts, therefore, it is difficult to accept Mr. Munim's contention that these two items of expenses could be said to be expenditure expended wholly or exclusively for the purpose of business of the assessee-company or was dictated by considerations of commercial or business expediency. Reliance on the Gujarat High Court decision in S.L. M. Maneklal Industries' case [1977] 107 ITR 133 seems to us clearly to be misplaced. The facts in that case were entirely different from the facts which are obtaining in the instant case. In that case the assessee-company had entered into three agreements with their foreign collaborators and it had spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expenditure had been incurred for giving annual dinners by way of feeding and entertaining the assessee-company's own labourers as well as labourers of cane-growers who were connected with the working of the mills. But as we have pointed out above, the assessee-company had admittedly paid properly all the wages due to such labourers as well as bonus due to them for the relevant years in question and the expenditure in question was incurred in addition to such payment of proper wages and bonus to the labourers. It is extremely doubtful whether the labourers would not have attended to the work of the assessee-company in the following seasons if such annual dinners had not been given to them, especially when the labourers had been paid their ..... X X X X Extracts X X X X X X X X Extracts X X X X
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