Commissioner Of Income Tax, Delhi v. Delhi Safe Deposit Co. Ltd

2BTR IT, faeritmeaATA7 yaa fassl ae featine seaat fafats(Commissioner of Income-Tax, Delhi M/s. Delhi Safe Deposit Company Limited).(12 Saat, 1982) (rararfaafs azo yao MEE ate Fo YAo aRETIAAT) 'alaet afafiar, 1961—are 37—ar-frateyFY metat—saaret Aiitare GA fRalfeal gra safea srqat sygi gift et ga wet ge feat ataI—aaat az-fratcormraatfaar & fraifeat gre sae war at tae at sata & eq4 ain—arzart wt aratasia oifea B aftzanHF aqfinat stat—der bag a at arguign g ate a gt fratfeatat carafe afafafaat &@ stax feat war ad 3—sa:qr 37 & aaa wetal atasy’ fathead war carer writ wae wT A sree we ehAT Sas eat Ht HIVATT ATahera weg H ars sae afyswyHUE ANT BT TH ATAIA Sa ar aie fasta A ga ala F adaara afae ar @ faeg sae wae artlert at az & at ag sterwaered UH TENT Hare ast staat faas sara afrac qtait safraa Hredt F sla aga aeat ZHAAT alalAd: Aa AHA aToats frat aa at eft & ara-are faatfeat at cari et at arecagP aear ar, fae 23fare faeifead armardy fafa & ata seraged ate aH aifnes & wre BAH fare alt A1 germs F fee.TE aaa & qaay at qaadl ar faareoa st war ate fatheadat ware afrate F Grae gas tt Aaae at) agp asoqrar weer ary gat frerifead at earare earfa aaron gare wazFy agraar at st gaa are aut Ft afsa a ot1 cet ag a esteTAT Heaga Ear fe ag afer wal fear nar fe aawtar fastPeat aren eget aritare BY aaeae: Baar Teaa F fre A arguiga—eaataT H wr A fear qatar, aa gt sa Wy sat Fo saat aMAT ATTFrater ah 1962-63 Faecal ga ag F eters Fraifeat[[|]]a woz fafese 47,500 waa & arfaea F aifan getaa F safemeqat FY 9,500 aaa Hl aati dat at ate qraHr slat Fana afafran & aha aa vet frateor sraarigat H ceare ferateorag ¥ gaat actat at ate at araac afeard 8 ga ATA ITSaad ain ardare we a fe faethe gare wea & fare fafaw ateOt rags wal a ate Ga THe ae HITaT as al at faa afafrarRB ayzAe ayaa fear a1 as 1 aeTH araHT agra (acter) forayaaa fratfedt 4 faater ate ay aatal a at, sorter set TTfaatvor area al ate ararey ox gfse He at: (He) KUTT THeareafan ST a un tet Ga at eft at faa aa afeaea wal(a) fraifedt 4 seama arf cafaern afer & gorat 3; site (1) ae|gifs sare afanen ay aye a fe avatar anitard at ate dfesare afar + agdt faci ¥ sa etfs sr arat aval feat,wafer aS oy aretare gear erat wel STARA | Ta THAT aT% arnt adia afraty & agerstar war ay fratfeat sr svar0afafratfce fearA at fear mar fe afe sareafeney afaneoA ae wa arat F aoa F H ata-aeay afeaaat gat ag Fay at arailarz & wea F fraifedt ar arfaes wel ear aaife fratfedrun HTH g, Safar dara qafaanafee & Feat wat sgl Arar at.anat ait ae fe faaifedt| seave dara cH arase caraarfaa geaeey a ram zak B omara saa a faye et a eqraarfasafee @ fear ari afaawr at ag at aa ar fis faeifedt & fare,gaara gift at ara cad & frater Fah erat weaHe far Meada adl & aafe cee game arar Ga are fear AT aHaT aT ATTfac cat wma % aridfs afaawa a afafsan erere 256(1) & ala feu me aaa wt ATATT BT fear aT, Kafr—auiaaaeqrarreif feat & afafran | ga Te at BBs arr ATA 256(2) H ® HAMA ala sea afsacTy raraay FT HT Farama & fader fearser eararaa & facia & aaase Blac tte rd tine| LIOL | J UAe Info To atarel % fate esiga Say seqan eararas F ater Bree ST Iatta arfer ata gz,:. afafaaifza—faaifza + seama cag agit ofasaroz ataa any 83 at afte & sara afer at aera & fae ot fis saRTUH AT SUAT STHTT AT He Ga Gaafss GAT war F fagfaat faaifedt ar faa adt ar tt cee ar,sora fear ari agaca ar fr afe tar aal feat war at faatfedt & grat ara Izear AT qa at ae afaeat at sa ae sara afar aurea gsSar| wrzare AY ATMA afer F aay A sag waT wygia earataat a wate aa sae Arar @ 1 aa afeheataat F agafafaaiter azar afer 2 fe faaifee arer fear qat eqa ar atergufsa ar at tar saa at wt fraifedt at carats afafafaat &aret aa far vat atag ate dt afafaatfcar fear war fe orearaax afafiaa, 1961 at ater 37 & seta wate ater 21 (Fer 9) “MART argaa To feesae fertfge weaat [wate aREerAzaT] 1157 fafa adistt afsanfiar : 1974 at fafas ata do 1235. COMMISSIONER OF INCOME TAX, DELHI DELHI SAFE DEPOSIT CO. LTD. January 12, 1982 [R.S. PATHAK AND E. S. VENKATARAMIAH, JJ] Income Tax Act, 1961-Sec_tion 37-Scopt of-Assessee, partner of a manag~ ing agency firm-Managed companY advanced loan to another /ir"1 at tM instance ofapartnerof the'firm-Loan turned out to be a bad debt-Loss of managed company partly made good by assessee~Reimbursed amount, if could be claimed as deduction under section 37, The assessee was a partner of a firm of managing agents. At the instance of one of the partners of the managing agency firm the managed company advanced to another firm a Jarge sum of money as loan. Eventually by reason of the failure of the borrower to repay the loao the managed company suffered Joss which was made good partly by the assessee and partly by one of its partners. Later, the managing agency firm had been reconstituted. When the assessee in its returns claimed as a deduction the sum paid by it in that year in pai'tial discharge of its liability, the Income Tax Officer disaUowed it holding that the assessee was not legally bound to make the payment and thc~fore it was not a busiD.css expenditure which could be allowed as a deduction. The Appellate Assistant Commissioner affirmed the order of the Income Tax Officer on the grounds that (a) the loss was actually the loss of a firm which was no more -in existence; (b) the loss had been borne by the asscsaee on personal considerations and (c) the loss was a loss of the managing agency and not of the partners concerned. Accepting the assessee's appeal the Tribunal held that even if there was a change in the constitution of the managing agency firm the assessee's liability as a partner had not ceased, that tho payment could not be treated as one made on personal considerations and that th.o asseasee had made the payment in question purely on business considerations with the sole object of maintaining its busiD.ess connection which was yielding profit. The High Court answered the reference in favour of the assessee. Dismissing the appeal, HELD : The true teot of. expenditure laid out wholly and exclusively for the purpoaes or trade or business is that it is incurred by the assessee as inci-dental to its trade for the purpose of keeping tho trade going and of making it r•Y and not in any other capacity than of a trader. (6 D·E) In the instant case the expenditure was rightly held to be deductible under s. 37 of the Act. Th~ assessee incurrCd the eXpenditure to avoid any adverse effect on its reputation, to protect the managing agency which was an income earning apparatus and for retaining it with the reconstituted firm in which the assessee's interest was the same as before. It was Jikely that but for-the expenditure, the fair name of the assessee would· have been tarnished and the managing agency would have been terminated. The expenditure incurred on the preservation of a profit earning asset of a business has always been held to be a deductible expenditure. The expenditure incurred by the assessce was neither gratuitous nor one incurred outside the trading activities of the assessee. [7 C·El Ushers's Wiltshire Brewery Ltd. v. Bruce, [1915] A. C. 433, British Insulated & Helsby Cables Ltd. v. Atherton, [1926] A. C. 205, Mitchell v. B. W. Noble Ltd. [1927] 1 K. B. 719; referred to. Commissioner of lncomt! tax, Kera/a v. Malayalam Plantation Ltd .• [19641 7 S.C.R. 693, followed. The fact that the firm has not claimed the expenditure as its own does not affect the right of the asmsee to claim deduction in respect of the amount in question in its assessment proceedings. [7 H, 8 A] CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1235 of !974. .Appeal by special leave from the judgment and order dated tbe 22nd March, 1973 of the Delhi High Court in Income Tax Reference No. 65 of 1968. S.C. Manchanda, J. Ramamurthy and Miss A. Subhashini for the Appellant. S. T. Desai and Bishambar Lal for the Respondent. 1968 & aaae fea wo 65 F feed seq cama >22 ard, 1973 % fata ate aida % fees fade earaae Fax atTS AHA| attarayt at are 2% TAN Uo Flo TAT MT Fo—wragiaadsl gutear garegto wo gurfaonareaxtfameazt ara sere at ate ae vararaa ar facta eararfaqfa Go Gao ameuAzat A feat | -emrarfaafs Sezer— '_ fate aaisa Mat st we ag atte 1968 & araae fade|Go 65 F fast sea rarataa &artla22ard, 1973 % fasiz7 < oat arta % face crea a 08 81 a2 fede araradatta afaazor|facet + araaz afafraa, 1961 (fat eat ead qeara afafraqBer Tag) BY ore 256(2) & get vee eqraraz|srer fee aapyaarRaT B argareor H Rar aeoe fafads aeqel2. ars & & 1 frtfeetaq F dad F: faaifeal gud ara (agt var wert) we wrath cw afer (fregat gas qeara sarq afaaen Gt HAI aaT &) amy saryafapatst at ca od at anita dy aegd tad area ard cogfeat aeguaater arqat fafats (fae gait gah cara ‘sahararqay’ Hel Tar g) araH oH sey ofeaH fafate arady ay gaat-aloMi Fo saee Ta afanwy AT Aree oe aaraeT F ea UT ata 1 Te anilarc Ge HT Ga ey, gar ae at (NAT) wat SAT: ye50 sfawa att 25 sfaaa ar: 39 25 sfama aa faaifed & oa91 ato Ho aar H Hea Te fae ore qaeey afaneoy GaA afs-aaa wand ton aga adh arufix ames wa aa age iatTar at das wre Ho fara uss Ga F-11,409 ew aarafe®ata Yat 4, vafereweg FAad vsto Fo farar wes qa,FARATFeTTTT F 1,90,092 aaa ay art saret eet 1 aPeormeqer, ware F 1,90,092 aaa ay art saret eet 1 aPeormeqer, ware 1,90,092 aaa ay art saret eet 1 aPeormeqer, ware aaa ay art saret eet 1 aPeormeqer, ware ay art saret eet 1 aPeormeqer, ware art saret eet 1 aPeormeqer, ware saret eet 1 aPeormeqer, ware eet 1 aPeormeqer, ware 1 aPeormeqer, ware aPeormeqer, ware ware FeTTTT F 1,90,092 aaa ay art saret eet 1 aPeormeqer, ware F 1,90,092 aaa ay art saret eet 1 aPeormeqer, ware 1,90,092 aaa ay art saret eet 1 aPeormeqer, ware aaa ay art saret eet 1 aPeormeqer, ware ay art saret eet 1 aPeormeqer, ware art saret eet 1 aPeormeqer, ware saret eet 1 aPeormeqer, ware eet 1 aPeormeqer, ware 1 aPeormeqer, ware aPeormeqer, ware warefaata ataat qosa fear ate aeadineat safae weqdt at gear SSIES SSS ‘VS ee afancor Get h fae car etfs Ger TAT araeTH Bt TAT | RTqz faatfedt ate art amare uae are-are wafers weg BY95,092 wm Saar aaafear feat &fasifertwr Tat47,500 wax ar Ae HN aa Br aa Ao He TAT B AT AMITo- xRo aary fear ari sat afaator Be ary gated fear TATfaa faaifedd arat aaaeara ate atto Ho gar wie atqito Fo gat A dto Ro gar aT cara feat ars frat at1962-63 ® acai gaat ® chert fratfed # are fafave47,500 sae & afar ® offen cetaa Fo sdfaa wert at ~9,500 equ at aazfn daar at ate aaat afeareh F aTerafatian & ata sa et faateo ertarfgat I seaaa fatto aesaat aetdt at ate ats araet afar AEA AAT I TATait ardgt wz at fa fratfeet aera awa & fau fafa dit Itarag wa ot ale ga gat ae aTTaTT as Aet or fara ofafraT& arqare aqara Prater ah 1 agias araTe argae (adler) Forayana fraifeat a faater ate at gatafaaizor ade at ata ararey ae gfee we at:a} at, (H) grea s7 WATT LET ITareafaaoo & us det we a eife at faaat aa aferet Tel g(a) faaifedt 3 gram erie daar afee & garat @; ae (1) ae oN,gifs save afencor oad ay aft ga fe arate Avera Blt ATdfs cara afeaea otagdt faa Hea aft ar erat retfear, gafae are at arvare saat stat AE He THAT | AT ATAATada % araaz attr afencr sane & sar war at fraifedtcar erat edtere He frat Tar 1 afaweor A. eer aay H ATT-ATTag afatratfea fear fa afe save aftee oa a TOT H qfeadagar 8 at at anitare & wr F fralfedd ar erfaea vel it salefratfed) wa weqdt 2, gafac dara qafaas fez & fear var agtWaT aT aaa ate ag fe faaifedd A seama aaa GH arascouaalfva aeaedt BY way Tay Bae uA geIa a faqge ethanqarfae efte & fear art afaner wr ag at aa ar fe fratfedt Se# fare seame erfa at aad ead & fateBat Tara SeqAarg ada aval & vats cae gear aan aadaren feat ot awaT atafte fire er aritere & arenafe aferee 3 afafaad ayere 256(1) # areita fre me rea atare ae fear ar, eafee The Judgment of the Court was delivered by VENKATARAMIAH, J. This appeal by special leave. is directed against the judgment and order dated March 22, 1973 of the Delhi High Court in Income-tax Reference No. 65 of 1968 made by the Income-tax Appellate Tribunal, Delhi pursuant to an order made by the High Court under section 256{2) of the Indian Income-tax. Act, J 9(i I (hereinafter referred to as 'the Act'). The facts of the case are these : The assessee (the respondent herein) is a public limited company. The assessee was a partner of a firm of managing agents known as M/s. Morari Lal Batra & Co. (hereinafter referred to as 'the managing agency firm') which was managing another public limited company called M/s. Bharat Carbon & Ribbon Manufacturing Co. Ltd. (hereinafter referred to as 'the managed company'). There were in all three partners in the manag-ing agency firm, the two other partners being V .K. Batra and Lal Balwant Roy who held 50% share and 25% share respectively in that firm. The assessee held the remaining 25% share. At the instance of V.K. Batra who held the major share in the managing agency firm, a l.arge sum was advanced by the managed company to a firm known as M/s. H.K. Sinha & Sons at Calcutta. When a demand for repayment was made, M/s. H.K. Sinha & Sons repudiat· . ed the claim except to· the extent of Rs. 11,409 and ultimately the managed company suffered a loss to the extent of Rs. 1,90,092 on account of the said transaction. Consequently it became necessary for the managing agency firm to make good the said loss. Thereupon the assessee and Lal Balwant Roy together undertook to pay to th_e managed company Rs. 95,092 out of which the share of the assessee was Rs. 47,500. The b~lance of the amount was· undertaken to be paid by R.K. Batra, brother of V.K. Batra. The managing agency firm was also reconstituted with the assessee, Lal Balwant Roy and R.K. Batra as partners, R.K. Batra taking the place of V.K. Batra. During the previous year corresponding to the assessment year 1962· 63, the &jfessee paid a sum of Rs. 9,500 to the managed company in partial discharge of its liability of Rs. 47,500 referred to above and claimed it by way of deduction in the assessment year in question in the assessment proceedings under the Act before the Income-tax Officer. The Income.tax Officer disallowed the said claim on the ground that the assessee was not legally bound to make the payment and . hence it was not a business expense that could be allowed under the Act. The Appellate Assistant Commissioner of Income-tax before whom the order of assessment was questioned by the assessee affirmed the order of assessment on the above question on three grounds : (a) the amount in question was actually the toss of a firm which was no more 'in existence; (b) th'e'' loss in question had been borne by the assessee on personal considerations, .and (c) the loss was the loss <i'f the managing agency firm and not of the partners concerned and since the managing agency firm had not claimed that loss in its return, none of its partners could claim it. When the matter was taken up in appeal' before the Income-tax Appellate Tribunal, the claim· of the asscssee was ai:cepted. The MATTMYA To farctt AG ferns wea [eato aeeraeat] 1159 attaret & afafaan at are 256(2) & ata gee. cararaaamaed far) gare sea Tarra Aus are Tifa feat aeafanco at fate fear fe farafafad ava sae faarel % facVer ae— Caar aMae B aeat Barat geateafefeafaat Ffaaifedt aft S ca afaraa fal ge w far gareSY saa safeae were aT Te ay at 1”||ae Feathers & cet F fear | seat eararaa F fray a gage gar3. free wey Tl FST ATATAT AA HT GAT THTadaret 4, star fe art war aar 2, fade ease ant ga aaa.FT adr Grea st 2|.| 4. s9q fear sat ae & fe aot meamTa waar aT farticat & arcane F waTaTAY B fee goa: ate qaqa: Ta TE aTaa fea ae qq Fe F aay aT awa s ar ae fs afafraaat are 37 & aeia wate Ber H edad 81 faediag az sat zfe ca cat F oxq ar aatarafasraat wal-wat afer gatReeg rr arg frat a afer @, aifnfera errnz & ate arfonferaadrataar } aaa faardl ate set 8 gana fafaewat ay sare Fwea ge sa ser oe fafarar fear war afar i adata ATAe Fcea & fa fratfeet ca saeeg arilare GAS STF HIAIT BTaft ate sae gat at areare Ba gakaa aera F are TaqAH HUT AA HT TH AAI Ma ar ate fagifed a ga ala& agar ara ataa ats fey sae cH arene Hl AT A Bl TY rarH HaeaTET cH TeMt< faare ast gt aar fae saee afunean GAate gafera arate dha aga wear qeenr araraa: aa aear ate teat aa at aft & ara-are faaifedt st earfa ayyaga Tet THAT at, fs 24 F far fathead st antara fate &aad vert agar ate Ta afar F grey Aa F fore aret atveered F fag ag gaat 8 geet st getaat sr fare gt warate faatfcel ar sare afeazor & Grad gare wa F al aaa at“UE UH AVAl-Aia seat ay gar Fraifeal BY saree eat aezoryTag tay F agraat at Hy saa ate aat st afer at att zat Liou sede raraira tara Gaal | 1982) 3 sHo ito qo- ag at sete Brat agergy slat fie ag afaa adl fear war farameter fratfedl aver eafawat arate at aaeag: Grae gaSay& fae FEa Haag arguige sar caaea ari & ers frees, fear weal war at se feagearon we gt va wtgala at at freg ara H aedt B arere oz ate saan afefeafaay% faarcila set ag & fe aar gaa HE eat TSAT| 5. aor na fanto sca &. arase Haar FH aaa aftora & eo H aaa yaa & age fered Hl aga wafarafoerar ara sara ema oaa-fantoear a araat afaea atdana i up eaters ema se)ge oer oe fears Hw gu aswatand fame watt fafres gary qa’ ara aaa Awae ares HY eae HWA BU GT HTL Aa eaae FEAT aT ‘gat ear arg at aay TAT GT HU ater FTUTE Br Tate Sate aA HT seat at ag Boa ary Te’ava fe FO AAT aH exe S Hat gases st A Haarqgaar zg, ary saat & faedy aradt Ft at ag fe aateraevafaatat vara arfas at aril gfase Fe He ara seaata @, fafer ay afse F qo ate aay sats a arafeg | Yfaeae & cara ay fama set wt ara v”| 6. fafer geqdee cos dcang Saen fafede gaara aada? Sa ara F as Ha F ag ae casa fear o1— “aga favrarat Tad Tata FT (1915)wo Flo 433 az fara aaa eanrditfes aifea anpatfealfer aregate wos Fea (1914) 3 Fo sto 674 aH ITT TIAA% ag cose we feat or fe aa at Te aaa AT fe saraal Marat alt saw seret ate aeyafer Grae % fac aGl afen cafeom ea 8 aor afafsas adder & eadGT Sl, TAT ATA ST FT HINT BLA, VA FRE TATA atafte & at aa a ag ara ga earare: FH salsa FH fac:que: alt TAIT: GT BY AT AH S 1” 1 (1915) ait Sia 433, ® (1926) aire Baw 005. UAL TAR To(calAH TEEMULSSToGRekt .7. argéa gaa Ho Tego ar fafadel ate may Fao Wee 4 ag afufratfea fear ar fs fret fdas a gearart & fare ate aeqat By dere & gars | faq @d feat qat garwelt ava1 sada na a AIM fadA ge WE ary atta X(fram froia q65 731 az &) a¢ afefratfea fear ar fs apTara ateafan afer srea wea &% faw él fear war at faa farBETA Ht Tat St earaTal st F qa fear at aw afen Heat erRTRATT BUH faearal at are gare at af & firar qar or ealfsarate % frat ar, fraar seq & fee oz FW TAT TS THAT BT;Sat fin segit tarfeae aa are faust a gafeate & aifaaifaeBF araeTara gi a fe gsitne aq Bh eq H ale eeTHT FE TAHT watery H fer Betsy ater & 8. qua: ae aaeTa: STITT aT erVaTe F gaeat F far Tribunal held inter alia that even if there was a change in the constitution of the managing agency firm, the liability of the assessee as a partner had not ceased, the assessee being a company, the payment could not be treated as one made on personal considera-tions and that the assessee had made the payment in question purely on business considerations with the sole object of maintaining its business connection which was yielding profit. The Tribunal was also of the view that there was no bar to the assessee claiming the loss in question in its own assessment even though it could have been first claimed by the firm and then in the hands of the partner. An application under section 256(1) of the Act having been rejected by the Tribunal, the appellant moved the High Court ·under section 256(2) of the Act. The High Court thereupon passed an order directing the Tribunal to refer the following question for its consideration : "Whether, on the facts and in the circumstances of the case, the assessee was entitled to any allowance on account of the share of loss made good by it to the · managed company ?" After the reference was made to it, the High Court answered the question in the affirmative anti in favour of the assessee. Dissatis-fied with the judgment of the High Court, the appellant has come up in appeal to this Court by special leave, as stated above. The first question which needs to be examined is whether the amount in question can be treated as an expenditure laid out or e)tpended wholly and exclusively for the purposes of the business of the assessee which is admissible as a deduction under section 37 of the Act. It is no doubt true that the solution to a question of this nature sometimes is difficult to arrive at. But, however difficult the task \ may be, a decision on that question should be given having regard to the decisions bearing on tile question and ordinary principles of coriunercial trading and of commercial expediency. The facts found in the present case are that the assessee was carrying ~n- business as a partner of the managil!g agency firm and it also had othe.r busi-nesses. The managing agency agreement with the managed company was a profitable source of income and that the assessee had con-tinuously earned income from that source. But on account of the .;negligence on the part of one of its partners, there arose a serious ' dispute which could have ordinarily resulted in a long drawn out litigation between the managing agency firm and the managed company affecting seriously the reputation of the assessee ib. · addition to any pecuniary loss which the assessee. as a partner was liable to bear on account of the joint and _several liability arising under the law of partnership. The settlement arrived at between the parties prevented effectively the hazards involved. in any litigation and also helped the assessee in continuing to enjoy the benefit of the managing agency which was a sound business proposition. It also assisted the assessee in retaining the business reputation unsullied. which it had built up over a number~of years. It is also material to notice here that it was not shown that t.he settlement was a gratuitous arrangeinent entered into by the assessee to benefit · the defaulting partner exciusively even thoughihe might have been benefitted to some extent. It is no doubt true that it was voluntary in character but on the facts and in the circumstances of the case whether it would make any difference at all is the point for consideration. Dealing with the question whether an expenditure incurred by a brewery in aid of their tenants of tied houses as a necessary incident of the profitable working of the brewery business was an admissible expenditure in the computation of the income-tax liability of the brewery, Lord Summer upholding the above claim observed in Usher's Wiltshire Brewery Ltd. v. Bruce(') thus: faq 4y sara at adh satel ae &fin faatfeat A eB sarare atTart & qatar F fare ate gare Hate aad anrz % fae aaySUTTTe & Thtorewe H fsa st a fe earare & fret Pret grewGfama1 erase arges, Bea TATA ae eeizarat fafede?ae ATA FH rate Year wa (ta fe ag va aA B) ges 705 azfafer at feafe ar arti ga sare fear at— “orcad faaar & ga farafafae faerd az agaz &:Sreart & TAT H fae’ ge ‘ara gases Hay H gale% faq’ca a afefe H afre sarre 2 1 sear ata faeqe@ 1 gah Heat Heart Hr Verret wr are ag Arar afew_ «Sas vara Br BeaaeT ger saat aalae ar argfray-we at aay 8, kaw gata areare ¥ afezaroy ale gaatanfeaat vat arafe at eacagwrsisn sfeat ar fastaeal & sear & gare & ogra wt anfaa Fi saat ofefeMAMTA Arey HA MN gs Td H EG Hage Hey& fru afatiea wt ate mrqal geal ar dara At afer@, CAH AeaTT HAT SAB arqins arn seq wrt ataT He F 1 Te HT ae fear Wt fara as at, gaat dare ¥ (1927) 1 Bo te 749, 2 [1964] ¥ cao dle mite 693. Nec) seaan emrarera Tae ate [1982] 3 gae lo qo gah Paarfiee Bb settorar arcane wr sates gle Tar STAsry BITTE HA B fac sar Ae Haifedt sa HrLArT FTara sufaa at aa afara F aa Beta 1” 9. meget aaa,F fraifedt ¥ cera axa are} afar Iz aia a ma 24 a afee 8 vara afaacT BY aaa & fac at feSAH UH AT STAT FIFA AT Ga gaifer GAH Tar Ffac faa faifedt at fea agt at st Tee at, gra FRAT aT geaa ay fe afe tar vat fear svar at fratfedd & geet areqt eat TT Hat aT ag afaee gt sar ate cara afaHeT TACTaz fear aan | earararal Freee at arAarstet afer FHsexegave saa a ater wetdt ava ory arateeat ofefeafaat% ag afafratfca wzar afer & fe Fratfeel are fear wat eae aTat araqufge ar ar tar eam ar A fraifedt at eareihea nfafafaat& aat aa fear var ari ag aa a afafratfes fear aa fa saaaren 37 & asta wate ater & 1 aa: gH Uses fear st ag aalatariaz ea ffs sara van F faq afafeaa at are 37 %anita aetetwr A arar vat fear st THAT | 10. faary at array acta & fis seaTa Gata Ga TY fratardarfeat t arf & eo H fratfee feat stat arfeg ar ate wa~ogrer tet artarfzal & eter ete arar a Peg ait at ear Ffanifedt & fate F gaat eetdd aqeia HAT Aaa set aT 1 kafader % cada F afafran st are 187 ate 67 wT aaaea featTar| qseey & fin serra cae wT gt fearar afe ag <HAfraifcat ara wa & afta dea st areata at Ga at fafeat srGara at gars ca & Sarit Aaa ate ay sfafer st arghear faaifed & sifta sit saferd weqdh ay dara BegFH aniaBe Ua Tat BY Me HT SH He FT AHI GH GT TS HT Siar aaTTTaat wear tafe faaifedt Ga wer er dare Ma waferr sett aarat at fe afan aera sola stat ge ay Fg eae THAe: Tar aTalan at ad & Aa ty ae at ead fasifedd ara seve farawaygti fase % feat fh gfeeatr Bag cea fe we at eae BT TATead ara say S eT A ast fear, wera waa a ara reife maEe mga To feetVe Feattete weal]act Prater avdaifeat& sett at win wer B faitafeare at rarfae adl wear wilt tar ata F fre ag fafaaraaeq ®gwar 21 ag afer vat fear var fF ara at fafarafcfeafaat % fraifedt arr fae ae aa eat aia feRTTHO|a|AL, gareraarart a vag fis marae a afefeataat 4 gareraarart a vag fis marae a afefeataat 4 a vag fis marae a afefeataat 4 vag fis marae a afefeataat 4 fis marae a afefeataat 4 marae a afefeataat 4 a afefeataat 4 afefeataat 4 4 AL, gareraarart a vag fis marae a afefeataat 4 gareraarart a vag fis marae a afefeataat 4 a vag fis marae a afefeataat 4 vag fis marae a afefeataat 4 fis marae a afefeataat 4 marae a afefeataat 4 a afefeataat 4 afefeataat 4 4gay eararaa % fafavaa A eae HUA BY aTaRTBAT melft«12, erdaa areal a aia at afer arfaa ar oat & |aater atfer| ah atfer| ah| ah ah re ater atfer| ah atfer| ah| ah ah re "Where the whole and exclusive purpose of the expenditure is the purpose of the expender's trade, and the object which the expenditure serves is the same, the mere fact that to some extent the expenditure enures to a third party's benefit, say that of the publican, or that the brewer incidentally obtains some advantage, say in his character of landlord cannot in law defeat the effect of the finding as to the whole and exclusive purpose." In British Insulated and Hels~y Cables Ltd.,v. Atherton(') Lord Cave ovserved . . "It was made clear in the above cited cases of Usher's Wiltshire Brewery v. Bruce, [1915] A.C. ,433 and Smith v. Incorporated Council of Law Reporting for England and (1) (1915] A.C.433. (2) [1926] A.C. 205. SUPREME COURT REPOl\TS Wales, [1914] 3 K.B. 674 that a sum of money expended, not of necessity and with a view to a direct and immediate benefit to the trade, but voluntarily and on the grounds of commercial expendiency, and in order indirectly to facilitate the carrying on the business, may yet be expended wholly and exclusively for the purposes of the trade." Rowlatt, J. in Mitchell v. B. W. Noble Ltd.(1) held that the money spent on getting rid of a director and saving the ·company from scandal was deductible. Affirming the aboce view, the Court of Appeal (whose judgment appears at page 73 I) held that as the payment was not made to secure an actual. asset so as effectually to increase the. capital . of the company but was made in order to enable the director( to carry on the business of the company as they had done in the past unfettered by the presence of the retiring director, which might have had a bad effect on the credit of the company, it must be treated as the income and not as capital expenditure and was deductible as such for income·tax purposes. The true te