Indian Molasses Co. (Private) Ltd v. The Commissioner Of Income-Tax, West Bengal

Case: INDIAN MOLASSES CO. (PRIVATE) LTD. versus THE COMMISSIONER OF INCOME-TAX, WEST BENGAL. [[1959] SUPP. 2 S.C.R. 964] (1959) May 5. 964 SUPREME COURT REPORTS THE INDIAN MOLASSES CO. (PRIVATE) LTD. v. THE COMMISSIONER OF INCOME-TAX, WEST BENGAL. (B. P. SINHA, J. L. KAPUR and M. HIDAYATULLAH, JJ.) Income-tax-Deduction -Business expendit11re-Payment of sums for getting annuities to provide pension-Liability depending on contingency-Expenditure, meaning of-Indian Income-tax Act, z922 (XI of z922), s. Io(2)(xv). With a view to provide a pension to H who was the manag-ing director of the appellant company, after his retirement at the age of 55 years on September 20, 1955, the company executed a trust deed on September 16, 1948, in favour of three trustees to w horn the company paid a sum of Rs. l,09,643 and further undertook to pay annually Rs. 4,364 for six consecutive years. The trustees undertook to hold the said sums upon trust to spend the same in taking out a Deferred Annuity Policy with an Insur-ance Society in the name of the trustees but on the life of H under which a certain sum of money was payable annually to H for life from the date of his superannuation. It was also pro-vided in the deed that notwithstanding the main clause the trustees would, if so desired by the company, take out instead a different kind of policy for the benefit of both H and his wife, with a further provision for H's wife should H die before he attained the age of 55. On January 12, f949, the trustees took out a policy, wherein the amount of Deferred Annuity to be paid per annum was fixed according as whether both H and his wife were living on September 20, 1955, or one of them died earlier. The policy also contained, inter alia, two clauses: "(1) Provided the contract is in force and unreduced, the Grantees (i. e., the trustees) shall be entitled to surrender the Annuity on the Option Anniversary (i.e., Sept. 20, 1955) for the Capital sum of£ 10,169 subject to written notice of the intention to surrender being received by the Directors of the Society within the thirty days preceding the Option Anniversary. (2) If both the Nominees shall die whilst the Contract remains in force and unreduced and before the Option Anniversary the said funds and Property of the Society shall be liable to make repayment to the Gran tees of a sum equal to a returu of all the premiums which shall have been paid under this Contract without interest after proof 'there-of and subject as hereinbefore provided." The appellant company paid the initial sum and the yearly premia for some years before H died. For the assessment years 1949-50, 1950-51, 1951-52 and 1952-53, the appellant claimed a deduction of these sums from its profits _or gains under s. l0(2)(xv) of the Indian Income-tax Act, 1922, but the Income-tax authori-z959 ties disallowed the claim on the ground that the sums claimed did not amount to expenditure within the meaning of the section. The Indian The appellant's contention was that payment of pension was an Mo~asses Co. expenditure of a revenue character and so also the payment of a (Prwate) Ltd. lump sum to get rid of a recurring liability to pay such pension v. and that expenditure on insurance was not contingent, because The Commissioner though the contingency related to life and depended on it, the of Incorpe-tax, probabilities were estimated on actuarial calculations and, that West Bengal the expenditure was, therefore, real. Held, that expenditure which is deductible for the purposes of income-tax under s. ro(2)(xv) of the Indian Income-tax Act, 1922, is one which must be towards a liability actually existing at the time, but the putting aside of money which may become expenditure on the happening of an event is not expenditure. Case: INDIAN MOLASSES CO. (PRIVATE) LTD. versus THE COMMISSIONER OF INCOME-TAX, WEST BENGAL. [[1959] SUPP. 2 S.C.R. 964] (1959) 1959 दइंडियनमोलेसिसकंपनी।( निजी) लिमिटेड। 5 मई। .वी -आयआयोगकर, पश्चिम बंगाल। ( बी. पी. सिन्हा, जे. एल. कपूरऔर एम. हृदयतुल्ला, जे. जे.) -----आयकरकटौतीव्यावसायिकव्पेंशनप्रदानकरनेकेलिएवार्षिकीप्राप्तकरनेकेलिएराशिकाभुगतानआकस्मिकताकेआधारपरदेयता-व्, जिसकाअर्थहै-भारतीयआय-करअधिनियम, 1922 ( 1922 काXI), एस।10 ( 2 ) ( xv)। अपीलकर्ताकंपनीकेप्रबंधनिदेशकएचकोपेंशनप्रदानकरनेकेउद्देश्यसे, 20 सितंबर, 1955 को55 वर्षकीआयुमेंउनकीसेवानिवृत्तिकेबाद, कंपनीने16 सितंबर, 1948 कोतीनन्यासियोंकेपक्षमेंएकन्यासविलेखनिष्पादितकिया, जिन्हेंकंपनीनेरु।1,09,643 औरआगेसालानारुपयेकाभुगतानकरनेकाबीड़ाउठाया।4,364 लगातारछहसालतक।न्यासियोंनेन्यासियोंकेनामपरएकबीमाकर्तासोसायटीकेसाथथएकआस्थथगितवार्षिकीनीतिलेनेमेंखर्चकरनेकेलिएउक्तराशिकोन्यासपररखनेकाबीड़ाउठाया, लेकिनएचकेजीवनकालपर, जिसकेतहतएचकोउनकीसेवानिवृत्तिकीतारीखसेजीवनभरकेलिएवार्षिकरूपसेएकनिश्चितराशिकाभुगतानकियाजाताथा।विलेखमेंयहभीकहागयाथाकिमुख्यखंडकेबावजूद न्यासी, यदिकंपनीद्वाराऐसाचाहाजाताहै, तोइसकेबजायएचऔरउसकीपत्नीदोनोंकेलाभकेलिएएकअलगतरहकीनीतिनिकालेंगे, जिसमेंएचकीपत्नीकेलिएएकऔरप्रावधानहोगाकिएचउसकीमृत्युसेपहलेमरजाए। उन्होंने55 वर्षकीआयुप्राप्तकी।12 जनवरी, 1949 कोन्यासियोंनेएकनीतिनिकाली, जिसमेंप्रतिवर्षभुगतानकीजानेवालीआस्थथगितवार्षिकीकीराशिइसआधारपरतयकीगईथीकिक्याएचऔरउनकीपत्नीदोनों20 सितंबर, 1955 कोरहरहेथे, याउनमेंसेएककीपहलेमृत्युहोगईथी।नीतिमेंअन्यबातोंकेसाथथ-साथथदोखंडभीशामिलथेः( 1 ) बशर्तेअनुबंधलागूहोऔरकमनहो, अनुदानप्राप्तकर्ता(यानीन्यासी) विकल्पवर्षगांठ(यानीसितंबर) परवार्षिकीकोसौंपनेकेहकदारहोंगे।20 , 1955 ) आत्मसमर्पणकरनेकेइरादेकीलिखितसूचनाकेअधीन£10,169 कीपूंजीराशिकेलिए सोसायटीकेनिदेशकोंद्वाराविकल्पवर्षगांठसेपहलेतीसदिनोंकेभीतरप्राप्तकियागया।( 2 ) यदिदोनोंनामांकितव्यक्तियोंकीमृत्युहोजातीहै, जबकिअनुबंधलागूऔरअपरिवर्तितरहताहैऔरविकल्पवर्षगांठसेपहलेसोसायटीकीउक्तनिधिऔरसंपत्तिअनुदानकर्ताओंकोउनसभीप्रीमियमोंकीवापसीकेबराबरराशिकापुनर्भुगतानकरनेकेलिएउत्तरदायीहोगी, जोइसअनुबंधकेतहतबिनाब्याजकेभुगतानकिएगएहोंगे। अपीलकर्ताकंपनीनेएचकीमृत्युसेपहलेकुछवर्षोंकेलिएप्रारंभिकराशिऔरवार्षिकप्रीमियमकाभुगतानकिया।निर्धारणवर्षों1949-50,1950-51,1951-52 और1952-53 केलिए, अपीलार्थीनेएसकेतहतअपनेलाभयालाभसेइनराशियोंकीकटौतीकादावाकिया।10 ( 2 ) ( XV) ( 2 ) एस. सी. आर. सर्वोच्चन्यायालयकीरिपोर्ट 965 भारतीयआय-करअधिनियम, 1922, लेकिनआय-करप्राधिकरण1959 नेइसआधारपरदावेकोअस्वीकारकरदियाकिदावाकीगईराशि धाराकेअर्थकेभीतरव्नहींथा।भारतीयअपीलार्थीकातर्कथाकिपेंशनकाभुगतानएकराजस्वचरित्रकामोलासीसकंपनीकाखर्चथाऔरइसलिएऐसीपेंशनकाभुगतानकरनेकेलिएआवर्तीदायित्वसेछुटटकारापानेकेलिएएक(निजी) लिमिटेडकाएकमुश्तभुगतानभीथा।औरबीमापरयहखर्चआकस्मिकनहींथा, क्योंकिआयुक्तहालांकिजीवनसेसंबंधितआकस्मिकताऔरउसपरनिर्भरथा, आयकर, संभावनाओंकाअनुमानबीमांकिकगणनापरलगायागयाथाऔरइसलिएपश्चिमबंगालकाखर्चवास्तविकथा। अभिनिर्धारित, वहव्जोप्रयोजनोंकेलिएकटौतीयोग्यहै --आयएसकेतहतकर।10 ( 2 ) ( भारतीयआयकरअधिनियम, 1922 काxv) वहहैजोवास्तवमेंमौजूददायित्वकेप्रतिहोनाचाहिए। उससमय, लेकिनपैसेकोअलगरखनाजोकिसीघटटनाकेघटितहोनेपरखर्चबनसकताहै, खर्चनहींहै।वर्तमानमामलेमेंन्यासविलेखकीशर्तोंकेअनुसारवार्षिकीकीखरीदकेलिएन्यासियोंकेहाथोंमेंधनरखागयाथा। यदिआवश्यकहोतोविभिन्नप्रकारकेसंबंध, लेकिनयदिवार्षिकीनहींखरीदीगईथीतोवापसकिएजानेकेलिए, औरन्यासियोंद्वारालीगईनीतिकेखंडोंसेपताचलताहैकि20 सितंबर, 1955 तक, अपीलकर्ताकान्यासियोंकेमाध्यमसेभुगतानकिएगएप्रीमियमपरअधिकारथा।इसलिएन्यासियोंकोभुगतानआकस्मिकताकेआधारपरदेयराशिकेरूपमेंकियाजाताथा।नतीजतन, दावाकीगईराशिएसकेतहतव्केरूपमेंकटौतीकेलिएउत्तरदायीनहींथी।10 ( 2 ) ( xv) अधिनियमका। -अंग्रेजीआयकरकानूनपरमामलोंकीसमीक्षाकीगई। सिविलअपील :सिविलअपीलीयक्षेत्राधिकार 1957 . 395कासं।निर्णयसेविशेषअनुमतिद्वाराअपीलऔर 1954 केआयकरसंदर्भसं. 15 मेंकलकत्ताउच्चन्यायालयकादिनांक21 दिसंबर, 1955 काआदेश।अपीलार्थीकीओरसेए. सी. संपतअयंगर, दीपकदत्ताचौधरीऔरबी. एन. घोष। भारतकेलिएअटॉर्नीजनरलएम. सी. सीतलवाड़, आर. गणपाथीअय्यर, आर. एच. ढेबरऔरडी. गुप्ता, जवाबदेनेकेलिए। 1959. 5 मई।न्यायालयकानिर्णयइसकेद्वारादियागयाथा हिदायतुल्ला, जे.- दइंडियनमोलासीसकंपनी।(प्री-हिदायतुल्लाजे. वेटे) लिमिटेड, कलकत्ता(इसकेबादनिर्धारितीकहाजाताहै) कंपनी) नेआयकरसंदर्भ966 सर्वोच्चन्यायालयरिपोर्ट[1959] में21 दिसंबर, 1955 केकलकत्ताउच्चन्यायालयकेफैसलेकेखिलाफ9 नवंबर, 1956 कोदीगईइसअदालतकीविशेषअनुमतिकेसाथथयहअपीलकीहै। 1959 1954 . 15कासं।संदर्भितकानूनकाप्रश्न उच्चन्यायालयथाः दइंडियन " चाहेतथ्योंपरहोयापरिस्थितियोंपर Case: INDIAN MOLASSES CO. (PRIVATE) LTD. versus THE COMMISSIONER OF INCOME-TAX, WEST BENGAL. [[1959] SUPP. 2 S.C.R. 964] (1959) Section: CONCLUSION Held, that expenditure which is deductible for the purposes of income-tax under s. ro(2)(xv) of the Indian Income-tax Act, 1922, is one which must be towards a liability actually existing at the time, but the putting aside of money which may become expenditure on the happening of an event is not expenditure. In the present case, on the terms of the deed of trust, money was placed in the hands of trustees for the purchase of annui-ties of different kinds, if required, but to be returned if the annuities were not bought, and the clauses in the policy taken out by the trustees showed that till September 20, 1955, the appellant had dominion through the trustees over the premia paid. The payment to the trustees was therefore towards a liabi-lity depending on a contingency. Consequently, the amount claimed was not liable to be deducted as an expenditure under s. ro(2)(xv) of the Act. Cases on English Income-tax law reviewed. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 395 of 1957. Appeal by special leave from the judgment and order dated December 21, 1955, of the Calcutta High Court in Income-tax Reference No. 15 of 1954. A. C. Sampath Iyengar, Dipak Dutta Choudhury and B. N. Ghosh, for the appellant. M. C. Setalvad, Attorney-General for India, R. Gana-pathy Iyer, R.H. Dhebar and D. Gupta, for the respon-dent. 1959. May 5. The Judgment of the Court was delivered by HIDAYATULLAH, J.-The Indian Molasses Co. (Pri-vate) Ltd., Calcutta (hereinafter called the assessee Company), have brought this appeal, with the special leave of this Court granted on November 9, 1956, against the judgment of the High Court of Calcutta dated December 21, 1955, in Income-tax Reference Hidayat«llah J. 966 SUPREME COURT REPORTS [1959] Supp. 1959 No. 15 of 1954. The question of law referred to the The Indian High Court was : Molasses Co. " 'Whether on the facts and in the circumstances (Pdvate) Ltd. of the case, and on a true construction of the Trust ' v. Deed, dated 16th September, 1948, and the Policy The Commissioner dated the 13th January, 1949, the payments made by 01 Income-tax, the assessee Company and referred to in paragraph 4 West Bengal a ove cons b t't I u e expen t ' d't I ure ' w1 'th' m th e meanmg . o f' Hidayatnllah J. that word in section 10(2)(xv) of the Indian Income. tax Act, 1922, in respect of which a claim for deduc-tion can be made, subject to the other conditions men-tioned in that clause being satisfied". The question was answered in the negative. The facts of the case are as follows : One John Bruce Richard Harvey was the Managing Director of the assessee Company in 1948. · He had by then served the Company for 13 years, and was due to retire at the age of 55 years on September 20, 1955. There was, it appears, an agreement by which the Company was under an obligation to provide a pen-sion to Harvey after his retirement. On September 16, 1948, the Company executed a Trust Deed in favour of three trustees to whom the Company paid a sum of£ 8,208-19-0 (Rs. 1,09,643) and further under-took to pay annually Rs. 4,364 (£ 326-14 sh.) for six consecutive years, and the trustees agreed to execute a declar.ation of trust. The trustees undertook to hold the said sums upon trust to spend the same in taking out a deferred Annuity Policy with the Norwich Union Life Insurance Society in the name of the trus-tees but on the life of Harvey under which £ 720 per annum were payable to Harvey for life from the date of his superannuation. It was also provided in the deed that notwithstanding the main clause the trus-tees would, if so desired by the assessee Company, take ont instead a deferred longest life policy, with the said Insurance Company, in their names, but in favour of Harvey and Mrs. Harvey for an annuity of £ 558-1-0 per annum payable during their joint lives from the date of Harvey's superannuation and during the lifetime of the survivor, provided further that if Harvey died before he attained the age of 55 years the Case: INDIAN MOLASSES CO. (PRIVATE) LTD. versus THE COMMISSIONER OF INCOME-TAX, WEST BENGAL. [[1959] SUPP. 2 S.C.R. 964] (1959) 1959. 5 मई।न्यायालयकानिर्णयइसकेद्वारादियागयाथा हिदायतुल्ला, जे.- दइंडियनमोलासीसकंपनी।(प्री-हिदायतुल्लाजे. वेटे) लिमिटेड, कलकत्ता(इसकेबादनिर्धारितीकहाजाताहै) कंपनी) नेआयकरसंदर्भ966 सर्वोच्चन्यायालयरिपोर्ट[1959] में21 दिसंबर, 1955 केकलकत्ताउच्चन्यायालयकेफैसलेकेखिलाफ9 नवंबर, 1956 कोदीगईइसअदालतकीविशेषअनुमतिकेसाथथयहअपीलकीहै। 1959 1954 . 15कासं।संदर्भितकानूनकाप्रश्न उच्चन्यायालयथाः दइंडियन " चाहेतथ्योंपरहोयापरिस्थितियोंपर मोलासीसकं। ( निजी) Ltd.of मामला, औरन्यासकेवास्तविकनिर्माणपर 16 सितंबर, 1948 काविलेखऔरनीति .वी आयुक्तने13 जनवरी, 1949 कोआय-कर, निर्धारितीकंपनीद्वाराकिएगएभुगतानकोअनुच्छेद4 पश्चिमबंगालमेंसंदर्भितकिया। '' उपरोक्तअर्थकेभीतरव्कागठनकरताहैहिदायतुल्लाजे. भारतीयआयकीधारा10 (2) (xv) मेंवहशब्दकरअधिनियम, 1922, जिसकेसंबंधमेंकटौतीकादावापुरुषोंकीअन्यशर्तोंकेअधीनयहकियाजासकताहै।"।उसखंडमेंसंतुष्टहोनेकाउल्लेखकियागयाहैइससवालकाजवाबनकारात्मकथा।मामलेकेतथ्यइसप्रकारहैंःएकजॉनब्रूसरिचर्डहार्वेकेप्रबंधनिदेशकथे1948 मेंनिर्धारितीकंपनी।तबतकवह13 वर्षोंतककंपनीकीसेवाकी, औरदेयथा20 सितंबर, 1955 को55 वर्षकीआयुमेंसेवानिवृत्तहुए।ऐसाप्रतीतहोताहैकिएकसमझौताथाजिसकेद्वाराकम्पनीकलमउपलब्धकराबयलेलबाध्यछल।अपनीसेवानिवृत्तिकेबादहार्वेकेलिएसायन।सितंबरको16 , 1948 , कंपनीनेएकन्यासविलेखनिष्पादितकियातीनन्यासियोंकापक्ष, जिन्हेंकंपनीनेभुगतानकिया£ 8,208-19-0 (रु. 1,09,643) औरआगेकेतहतवार्षिकरूपसेरु।4,364 ( £ 326-14 श.)छहकेलिएलगातारवर्षोंतक, औरन्यासीनिष्पादितकरनेकेलिएसहमतहुएविश्वासकीघोषणा।न्यासियोंनेरखनेकावचनदियाट्रस्टटपरउसीराशिकोलेनेमेंखर्चकरनेकेलिएउक्तराशिनॉर्विचकेसाथथएकस्थथगितवार्षिकीनीतिबनाएँट्रसकेनामपरयूनियनलाइफइंश्योरेंससोसाइटी£720टीज़लेकिनहार्वेकेजीवनपरजिसकेतहतप्रतितारीखसेहार्वेकोजीवनभरकेलिएवर्षदेयथाउनकीसेवानिवृत्ति।यहभीप्रदानकियागयाथाविलेखकिमुख्यखंडकेबावजूद टीज़, यदिनिर्धारितीकंपनीद्वाराऐसावांछितहै, इसकेबजायएकविलंबितसबसेलंबीजीवननीति उक्तबीमाकंपनी, उनकेनामपर, लेकिन कीवार्षिकीकेलिएहार्वेऔरश्रीमतीहार्वेकापक्ष £ 558-1-0 उनकेसंयुक्तजीवनकेदौरानदेयप्रतिवर्ष हार्वेकीसेवानिवृत्तिकीतारीखसेऔरउसकेदौरान उत्तरजीवीकाजीवनकाल, आगेबशर्तेकियदि हार्वेकी55 वर्षकीआयुप्राप्तकरनेसेपहलेहीमृत्युहोगई(2) एस. सी. आर. श्रीमतीहार्वेकोदेयसर्वोच्चन्यायालयरिपोर्ट967 £ 611-12-0 वार्षिकीहोगी। 1959 अपनेजीवनकेदौरान।यहआगेप्रावधानकियागयाथाकि दइंडियन 55 हार्वेकीवर्षकीआयुप्राप्तकरनेसेपहलेहीमृत्युहोजातीहै। मोलासीसकं। न्यासियोंकेपासपूंजीमूल्यहोगा ( प्राइवेटट) लिमिटेड। आस्थावानखरीदपरआस्थथगितवार्षिकीनीति V. इसकेसाथथश्रीमतीहार्वेकेलिएउपरोक्तआयुक्तबीमाकंपनीयाकिसीअन्यआय-करबीमाकंपनी, पश्चिमबंगालकेसाथथवार्षिकी। प्रतिष्ठित।न्यासविलेखकीअन्यशर्तें इसपरविचारकरनेकीआवश्यकतानहींहै, क्योंकिवेहिदायतुल्लाजे. विवादकोस्वीकारनहींकरतेहैं। इनउपहारोंकोआगेबढ़ातेहुएन्यासियोंने 12 जनवरी, 1949 कोएकनीतिजारीकी।ऐसीपॉलिसियोंमेंसामान्यशर्तोंकेअलावा, इसनेनिम्नलिखितलाभप्रदानकिएः ए प्रतिवर्षराशि £ 563-5-8 पी।ए।अगरदोनों आस्थथगितवार्षिकी। श्रीऔरश्रीमतीहार्वे 20 सितंबरकोरहतेहुए, 1955 . £ 720-0-0 .पी।ए।अगरश्रीमती हार्वेकोपहलेहीमरजानाचाहिए।20 सितंबर, 1955, छोड़तेहुएहार्वेउससेबचगया।£ 645-0-0 पी।ए।अगरहार्वेसितंबरसेपहलेमरनाचाहिए20 , 1955 , श्रीमतीहरकोछोड़तेहुएवेउसेबचाताहै।एकविशेषप्रावधानथाजिसकीनिंदाकीजानीचाहिए।धोखादियाः" बशर्तेअनुबंधलागूहोऔरकमनहो,-अनुदानप्राप्तकर्ता(अर्थातन्यासी) इसकेहकदारहोंगेविकल्पवर्षगांठपरवार्षिकीकासमर्पणकरें(अर्थात,सितम्बर।20 , 1955 ) £10,169 विषयकीपूँजीराशिकेलिएआत्मसमर्पणकरनेकेइरादेकीलिखितसूचनासोसायटीकेनिदेशकोंद्वाराप्राप्त"।विकल्पवर्षगांठसेतीसदिनपहलेनीतिकीदूसरीअनुसूचीकेदोअन्यखंडयहभीउद्धृतकियाजासकताहैः( III) "यदिदोनोंनामांकितव्यक्तियोंकीमृत्युहोजाएगी, जबकिअनुबंधलागूऔरअपरिवर्तितऔरउससेपहलेबनारहताहै।उक्तनिधियोंऔरसंपत्तिकीविकल्पवर्षगांठसोसायटीका968 सर्वोच्चन्यायालयरिपोर्ट[1959] सप. कोपुनर्भुगतानकरनेकेलिएउत्तरदायीहोगा। 1959 इसअनुबंधकेतहतभुगतानकिएगएसभीपूर्वऋणोंकीवापसीकेबराबरराशिकेअनुदानकर्तादइंडियन मोलासीसकं. बिनाब्याजकेउसकेप्रमाणकेबादऔरविषयकेरूपमें(निजी) लिमिटेडयहाँपहलेप्रदानकियागयाहै।( IV) अनुदानप्राप्तकर्ताविकल्पएनीकेसमक्षउपस्थितहोंगे। .वी आयुक्तबनामऔरआयकरकासमर्पणमूल्यप्राप्तकरनेकेबाद, सभीप्रीमियमों(हिदायतुल्लाजे. वार्षिकदरपर) कीवापसीकेबराबरनकदभुगतानपश्चिमबंगालकेलिएअनुबंधकोआत्मसमर्पणकरनेकाहकदारहोगा, जिसकाभुगतानपहलेवर्षके Case: INDIAN MOLASSES CO. (PRIVATE) LTD. versus THE COMMISSIONER OF INCOME-TAX, WEST BENGAL. [[1959] SUPP. 2 S.C.R. 964] (1959) annuity payable to Mrs. Harvey would be £ 611-12-0 I959 during her life. It was further provided that should Harvey die before attaining the age o 55 years, f the Molasses The Indian co. trustees would stand possessed of the capital value of (Private) Ltd. the Deferred Annuity Policy, upon trust to purchase v • . therewith an annuity for Mrs. Harvey with the above The Commissioner Insurance Company or another Insurance Company 0! Income-tax, of repute. The other conditions of the deed of trust West Bengal need not be considered, because they do not bear upon Hidayatullah J. the controversy. In furtherance of these presents, the trustees took out a policy on .January 12, 1949. In addition to conditions usual in such policies, it provided for the following benefits : £ 563-5-8 p. a. if both Mr. and Mrs. Harvey be living on September 20, 1955. Amount per annum of deferred Annuity. £ 720-0-0 p. a. if Mrs. Harvey should die before September 20, 1955, leaving Harvey surviving her. £ 645-0-0 p. a. if Harvey should die before September 20, 1955, leaving Mrs. Har-vey surviving him. There was a special provision which must be repro- duced: "Provided the contract is in force and unreduced, the Grantees (i.e., the trustees) shall be entitled to surrender the Annuity on the Option Anniversary (i.e., Sept. 20, 1955) for the Capital sum of £ 10,169 subject to written notice of the intention "to surrender being received by the Directors of the Society within the thirty days preceding the Option Anniversary." Two other clauses of the second schedule of the Policy may also be quoted: (III) "If both the Nominees shall die whilst the Contract remains in force and unreduced and before the Option Anniversary the said funds and Property of the Society shall be liable to make repayment to ' 968 SUPREME COURT REPORTS [1959] Supp. the Grantees of a sum equal to a return of all the pre-miums which shall have been paid under this Contract without interest after proof thereof and subject as herein before provided. 1959 The Indian Molasses co. (Private) Ltd. v. v. (IV) The Grantees shall before the Option Anni-Commissioner versary and and after it has acquired a Surrender Value has acquired a Surrender Value 01 Income-tax, be entitled to surrender the Contract for a Cash Pay-West Bengal ment equal to a return of all the premiums (at the Hidayatullah f. yearly rate) which have been paid less the first year's premium or five per cent. of the Capital Sum specified in the Special Provision of the First Schedule which-ever shall be the lesser sum, provided that if the Deferred Annuity has been reduced an equivalent reduction in the guaranteed Surrender Value as calcu-• lated above will be made. " n, Commissioner versary and and after it has acquired a Surrender Value has acquired a Surrender Value The assessee Company paid the initial sum and the yearly premia for some years before Harvey died. In the assessment years 1949-50, 1950-51, 1951-52 and 1952-53, it claimed a deduction of.these sums from its profits or gains under s. 10(2)(xv) of the Indian In-come-tax Act (hereinafter called the Act), which provides: . "Such profits or gains shall be computed after making the following allowances, namely, any expenditure (not being in the nature of capital expenditure or personal expenses of the assessee) paid out or expended wholly and exclusively for the pur-poses of such business, profession or vocation. " This claim was disallowed by the Department and the Appellate Tribunal. The Tribunal held that it was not necessary to decide if the expenditure was wholly or exclusively for the purposes of the Com-pany's business, and if so, whether it was of a capital nature, because in the Tribunal's opinion there was no expenditure at all. The reason why the Tribunal held this way may be stated in its own words : "Clauses (I) and (II) do not contain any provi- Case: INDIAN MOLASSES CO. (PRIVATE) LTD. versus THE COMMISSIONER OF INCOME-TAX, WEST BENGAL. [[1959] SUPP. 2 S.C.R. 964] (1959) 1959 इसअनुबंधकेतहतभुगतानकिएगएसभीपूर्वऋणोंकीवापसीकेबराबरराशिकेअनुदानकर्तादइंडियन मोलासीसकं. बिनाब्याजकेउसकेप्रमाणकेबादऔरविषयकेरूपमें(निजी) लिमिटेडयहाँपहलेप्रदानकियागयाहै।( IV) अनुदानप्राप्तकर्ताविकल्पएनीकेसमक्षउपस्थितहोंगे। .वी आयुक्तबनामऔरआयकरकासमर्पणमूल्यप्राप्तकरनेकेबाद, सभीप्रीमियमों(हिदायतुल्लाजे. वार्षिकदरपर) कीवापसीकेबराबरनकदभुगतानपश्चिमबंगालकेलिएअनुबंधकोआत्मसमर्पणकरनेकाहकदारहोगा, जिसकाभुगतानपहलेवर्षके प्रीमियमयापांचप्रतिशतसेकमकियागयाहै।पहलीअनुसूचीकेविशेषप्रावधानमेंनिर्दिष्टपूंजीराशिजोकभीभीकमराशिहोगी, बशर्तेकियदिआस्थथगितवार्षिकीकोघटायागयाहैतोगारंटीकृतसमर्पणमूल्यमेंगणनाकेरूपमेंसमतुल्यकमी। "।ऊपरलिखाजाएगा निर्धारितीकंपनीनेहार्वेकीमृत्युसेपहलेकुछवर्षोंकेलिएप्रारंभिकराशिऔरवार्षिकप्रीमियमकाभुगतानकियाथा।मूल्यांकनवर्षों1949-50,1950-51,1951-52 और1952-53 में, इसनेएसकेतहतअपनेलाभयालाभसेइनराशियोंकीकटौतीकादावाकिया।10 ( 2 ) ( भारतीयआनेवालेकरअधिनियम(जिसेइसकेबादअधिनियमकहाजाताहै) काxv), जो प्रदानकरताहैः " इसतरहकेलाभयालाभकीगणनाबादमेंकीजाएगी। निम्नलिखितभत्तेदेना, अर्थात्- (जोनिर्धारितीकेपूँजीगतव्याव्यक्तिगतव्कीप्रकृतिकानहो) ऐसाकोईव्जोऐसेव्यवसाय, वृत्तियाव्यवसायकेप्रयोजनोंकेलिएपूरीतरहसेऔरविशेषरूपसेभुगतानकियागयाहोयाखर्चकियागयाहो।विभागऔरअपीलीयन्यायाधिकरणनेइसदावेकोअस्वीकारकरदियाथा।न्यायाधिकरणनेअभिनिर्धारितकियाकियहतयकरनाआवश्यकनहींथाकिव्पूरीतरहसेयाविशेषरूपसेआयोगकेउद्देश्योंकेलिएथायानहीं। पैनीकाव्यवसाय, औरयदिऐसाहै, तोक्यायहपूंजीगतप्रकृतिकाथा, क्योंकिन्यायाधिकरणकीरायमेंकोईव्नहींथा।न्यायाधिकरणनेऐसाक्योंमानाइसकाकारण इसतरहसेअपनेशब्दोंमेंकहाजासकताहैः " खंड(I) और(II) मेंऐसाकोईप्रावधाननहींहैजिसकाखंड(III) सेकोईसंबंधहो। इसलिएयदिऐसाहोताहैकि20 सितंबर, 1955 सेपहलेश्रीऔरश्रीमतीहार्वेदोनोंकीमृत्युहोजातीहै, तोन्यासियोंकेमाध्यमसेबीमासोसायटीकोकिएगएसभीभुगतानन्यासियोंकोवापसआजाएंगेऔरक्योंकि(2) एस. सी. आर. सर्वोच्चन्यायालयकीरिपोर्ट969 मेंऐसाकोईसंकेतनहींहैकिन्यासियोंकाइनधनमेंकोईलाभकारीहितहोनाचाहिए, जिसकेपरिणामस्वरूपअबतकभुगतानकिएगएधनकेसंबंधमेंकंपनीकेपक्षमेंविश्वासहोगा।दूसरेशब्दोंमें, जोकियागयाहैवहएकआकस्मिकताकेप्रावधानकेबराबरहैजोकभीउत्पन्ननहींहोसकताहै।आयुक्तकेइसतरहकेप्रावधानकोशायदहीआयकरकेभुगतानकेरूपमेंमानाजासकताहै, एककर्मचारीचाहेवहपारिश्रमिककाहोयापेंशनकाया 1959 दइंडियन मोलासीसकं. (प्राइवेटटलिमिटेड) वी. पश्चिमबंगाल ग्रेच्युटी, औरहिदायतुल्लाजे. केखिलाफएकउचितकटौतीनहींहोसकतीहै। इसकेकरयोग्यलाभकीगणनाकरनेकाउद्देश्य।संक्षेपमें, कंपनीद्वाराअभीतककोईखर्चनहींकियागयाहै; उसकेधनकाकेवलएकहिस्साउसखर्चकेलिएआवंटितकियागयाहैजोभविष्यमेंकियाजासकताहै(यानहींभीहोसकताहै)।99 हालाँकि, न्यायाधिकरणनेउपरोक्तप्रश्नकोउच्चन्यायालयकीरायकेलिएभेजा।उच्चन्यायालयनेप्रश्नकेसीमितदायरेकोदेखाऔरबतायाकिन्यायाधिकरणनेमामलेकेवक्तव्यकेअंतमेंकहाथाः " उच्चन्यायालयकेअभिनिर्धारितकरनेकीस्थितिमेंकि इसमामलेमेंएकव्था, फिरभीन्यायाधिकरणकेलिएयहआवश्यकहोगाकिक्याधनपूरीतरहसेऔरविशेषरूपसेनिर्धारितीकेव्यवसायकेउद्देश्योंकेलिएनिर्धारितकियागयाथायाखर्चकियागयाथाऔरयदिऐसाहै, तोक्याव्पूंजी99कीप्रकृतिमेंथायानएव्कापुनर्भरण। कलकत्ताउच्चन्यायालयकेविद्वानमुख्यन्यायाधीश(सरकार, जे., सहमत) नेप्रश्नकीकठिनाईकोमहसूसकिया।उन्होंनेसी. एल. केअवयवोंकाविश्लेषणकिया।( xv), औरइंगितकियाकिप्रश्नएकऐसेघटटककोसंदर्भितकरताहै।हालांकि, डिवीजनलबेंचनेतथ्यकेअतिरिक्तबयानकीमांगनहींकी, याबाकीमामलेकोसंदर्भितकरनेकेलिएनहींकहा, ताकिइसमेंशामिल.पूरेप्रश्नकानिपटाराकियाजासके।यह "देखागयाःइसन्यायालयनेहमेशाप्रश्नोंकाअर्थनिकालाहै इसेकुछहदतकसख्तीकेसाथथसंदर्भितकियागयाहैऔरइसकेसमक्षकिसीभीबिंंदुकाप्रचारकरनेकीअनुमतिनहींदी122 970 गईहैजोअपीलीयन्यायाधिकरणकेसमक्षनहींउठायागयाथाऔरजोन्यायाधिकरणकीसर्वोच्चन्यायालयरिपोर्ट[1959] केअंतर्गतनहींआयाथा। 1959 अपीलीयआदेश।इसलिए, मेरीरायहैकिइसप्रश्नकोकेवलआधारकेरूपमेंलियाजानाचाहिए। दइंडियन जिसपरन्यायाधिकरणनेभुगताननहींहोनेकाफैसलाकिया मोलासीसकं। किसीअन्य(निजी) लिमिटेडकोशामिलनहींकरनेकेरूपमेंकटौतीकेरूपमेंस्वीकार्य। "।जमीन आयुक्त हमेंअपनाखेदव्यक्तकरनाचाहिएकिमामलेनेलेलिया -आयकर, निश्चितरूपसेऐसाहुआ।मूल्यांकनकाआदेशइसप्रकारपारितकियागयाथा पश्चिमबंगाल 1952 तक, औरअबसातसालबीतचुकेहैं-न्यायमूर्तिहिदायतुल्ला, जिसकेदौरानतीनमेंसेकेवलएकप्रश्ननिर्णयकेलिएअदालतोंकेसमक्षहै।धारा10 (2) (xv) काविश्लेषणकियागया। विद्वानमुख्यन्यायाधीशद्वाराइनशब्दोंमेंः " यहध्यानदियाजाएगाकितीनसामग्री खंडअपनीभाषाकीसतहपरस्थितहै।क्रममें Case: INDIAN MOLASSES CO. (PRIVATE) LTD. versus THE COMMISSIONER OF INCOME-TAX, WEST BENGAL. [[1959] SUPP. 2 S.C.R. 964] (1959) This claim was disallowed by the Department and the Appellate Tribunal. The Tribunal held that it was not necessary to decide if the expenditure was wholly or exclusively for the purposes of the Com-pany's business, and if so, whether it was of a capital nature, because in the Tribunal's opinion there was no expenditure at all. The reason why the Tribunal held this way may be stated in its own words : "Clauses (I) and (II) do not contain any provi- sion having a material bearing upon Clause (III). Therefore if it happens that both Mr. and Mrs. Harve:y die before 20th September, 1955, all the payments till made through the Trustees to the Insurance Society will come back to the Trustees and as there is not the slightest trace of any indication anywhere that the 1959 Trustees should have any beneficient interest in these moneys, there would be a resultant trust in favour of The Indian Molasses Co. the Company in respect of the m_oneys thus far paid (Private Ltd.) out. In other words, what has been done amounts to v. a provision for a contingency which may never arise. The Commissioner Such a provision can hardly be treated as payment to of Income-tax, an employee whether of remuneration or pension or West Bengal gratuity, and cannot be a proper deduction against Hidayatullah J. the incomings of the business of the Company for the purpose of computing its taxable profits. In short, there has been no expenditure by the Company yet; there has been only an allocation of a part of its funds for an expenditure which may (or may not) have to be incurred in future. " The Tribunal, however, referred the above-stated question for the opinion of the High Court. The High Court noticed the limited scope of the question, and pointed out that the Tribunal had stated at the end of the Statement of the Case: " In the event of the High Court holding that there was an expenditure in this case, it would still be necessary for the Tribunal whether the money was laid out or expended wholly and exclusively for the purposes of the assessee's business and, if so, whether the expenditure was in the nature of capital or reve-nue expenditure. " The learned Chief Justice of the Calcutta High Court (Sarkar, J., concurring) felt the difficulty of the ques-tion. He analysed the ingredients of cl. (xv), and pointed out that the question referred to but one such ingredient. The Divisional Bench, however, did not call for an additional statement of fact, or ask that the rest of the matter be referred, so that the whole of the question involved might get disposed of. It observed: "This Court has always construed questions referred to it with a certain degree of strictness and has not allowed any point to be canvassed before it which had not been raised before the Appellate Tribu-nal and which was not covered by the Tribunal's 122 970 SUPREME COURT REPORTS [1959] Supp. appellate order. I am, therefore, of opinion that the question should be taken as covering only the ground upon which the Tribunal held the payments to be not allowable as deductions as not embracing any other ground. " · r959 The Ind;an Molasses co. (Private) Lid. v. The Commissioner We must express our regret that the case took the of Income-tax, course it did. The order of assessment was passed as rVest Bengal lar .c b k ac as 1 52, 9 an d seven years have now passed Hidayatullah J. during which only one question out of three is before the Courts for decision. Section 10(2)(xv) was analysed by the learned Chief Justice in these words : The Commissioner " It w'ill be noticed that three ingredients of the clause lie on the surface of its language. In order that a deduction may be claimed under its provisions, it must be proved first that there was an expenditure, secondly, that the expenditure was not in the nature of a capital expenditure-I am leaving ·aside the per-sonal expenses-and, thirdly, that it was laid out or expended wholly and exclusively for the purposes of the assessee's business-I am leaving out profession or vocation. " Case: INDIAN MOLASSES CO. (PRIVATE) LTD. versus THE COMMISSIONER OF INCOME-TAX, WEST BENGAL. [[1959] SUPP. 2 S.C.R. 964] (1959) मोलासीसकं। किसीअन्य(निजी) लिमिटेडकोशामिलनहींकरनेकेरूपमेंकटौतीकेरूपमेंस्वीकार्य। "।जमीन आयुक्त हमेंअपनाखेदव्यक्तकरनाचाहिएकिमामलेनेलेलिया -आयकर, निश्चितरूपसेऐसाहुआ।मूल्यांकनकाआदेशइसप्रकारपारितकियागयाथा पश्चिमबंगाल 1952 तक, औरअबसातसालबीतचुकेहैं-न्यायमूर्तिहिदायतुल्ला, जिसकेदौरानतीनमेंसेकेवलएकप्रश्ननिर्णयकेलिएअदालतोंकेसमक्षहै।धारा10 (2) (xv) काविश्लेषणकियागया। विद्वानमुख्यन्यायाधीशद्वाराइनशब्दोंमेंः " यहध्यानदियाजाएगाकितीनसामग्री खंडअपनीभाषाकीसतहपरस्थितहै।क्रममें ताकिइसकेप्रावधानोंकेतहतकटौतीकादावाकियाजासके, पहलेयहसाबितकियाजानाचाहिएकिएकखर्चथा, दूसरा, किखर्चपूंजीगतव्कीप्रकृतिमेंनहींथा- मैंप्रतिसोनलखर्चकोअलगछोड़रहाहूं-औरतीसरा, कियहपूरीतरह- सेऔरविशेषरूपसेनिर्धारितीकेव्यवसायकेउद्देश्योंकेलिएनिर्धारितकियागयाथायाखर्चकियागयाथामैंपेशेयाव्यवसायकोछोड़रहाहूं। हमेंगलतीखोजनेकेरूपमेंनहींसमझाजानाचाहिए डिवीजनलबेंच।इसनेइससवालकाफैसलाकियाकि फ्रेमकियागया।यहन्यायाधिकरणहैजिसनेप्रश्नोंकोसंदर्भितकिया इसरूपमेंनिर्णयलेनेकाअधिकारअपनेपासरखतेहुए क्याइसप्रश्नकाउत्तरउसेप्रस्तुतकिएगएसौम्यरूपमेंदियाजासकताहै, यहएकऐसामामलाहैजिसकेलिएहमेंवर्तमानमेंखुदकोसंबोधितकरनाहोगा।लेकिनहमेंऐसालगताहै कियहव्यवसायकेबारेमेंजानेकाएकबहुतहीअसंतोषजनकतरीकाहै।शायद, न्यायाधिकरणनेइसमामलेकाफैसलाइसतरहसेकियाऔरअपनेद्वाराकिएगएप्रश्नकोसंदर्भितकिया, क्योंकिउसेलगाकियदियहन्यायालयइलाहाबादबैंक..लिमिटेडबनामकॉम आय-करमिशनरी, पश्चिमबंगाल(1) सी. एल. केअन्यघटटकोंकेसंदर्भकेबिनायहतयकरनेमेंसक्षमथाकिक्याएकविशेषपरिव्'व्' था।( xv), इसमामलेमेंभीऐसाहीकियाजासकताहै।हालाँकि, वहमामलाअपनेतथ्योंमेंबहुतअलगथा।वहाँ, पेंशनकेभुगतानकेलिएन्यासपरकुछयोगदान।कर्मचारियोंकेलिए6 खर्चनहींमानागयाथा, क्योंकिमूलन्यासकेविफलहोनेपर, पैसाथा ( 1 ) [ 1954 ] एस. सी. आर. 195. ( 2 ) एस. सी. आर. सर्वोच्चन्यायालयकीरिपोर्ट 971 न्यासियोंद्वारानिर्माताकेलाभकेलिएपरिणामीन्यासपरआयोजितमानाजाताहै।यदिइसमामलेमेंभीयहीकहाजासकताहै, अर्थात्, किखातावर्षोंमेंधननिर्धारितीकंपनीकाबनारहा, तोन्यासियोंयाबीमाकंपनीकोइसकेभुगतानकेबावजूद, जवाबदेनेकीसंभावनाहोसकतीहै।आयुक्तनेप्रश्नकियाजैसाकिआयकरकेइसनिर्णयमेंकियागयाथा, पश्चिमबंगालन्यायालयनेपहलेउद्धृतकियाथा।लेकिनअगरऐसाएकस्पष्टप्रस्तावहै 1959 दइंडियन मोलासीसकं. (प्राइवेटट) लिमिटेडवी. यहनिर्धारितनहींकियाजासकताहै, तोजाहिरहै, हिदायतुल्लाजे. कोयहतयकरनेमेंकाफीकठिनाईहैकि6 खर्चक्याहै। खंडकेभीतर, इसकेशेषप्रावधानोंकेसंदर्भकेबिना।बेशक, 'व्' शब्दकाअर्थखोजनेकेलिए, एकशब्दकोशकीआवश्यकताहै, लेकिनआगेजानेऔरयहतयकरनेकेलिएकिक्याइसमामलेमेंपरिव्'व्' था, जिससंदर्भमेंखंडमेंशब्दकाउपयोगकियागयाहै, सफलताकोपूरीतरहसेनहींछोड़ाजासकताहै। निर्धारितीकंपनीकेश्रीसंपतअयंगरनेहमारेसमक्षप्रश्नकीसंकीर्णताकीशिकायतकी, हालांकिउच्चन्यायालयकेसमक्षवे.प्रश्नकेदायरेकेकिसीभीविस्तारकेखिलाफथे।द मुख्यन्यायाधीशकेनिर्णयसेनिम्नलिखितअंशपीठकेसमक्षविभागऔरनिर्धारितीकंपनीकेसंबंधितदृष्टिकोणकोदर्शाताहैःश्रीमेयरनेतर्कदियाकिउसभाषाकाअधिकारहै उन्होंनेनकेवलयहतर्कदियाकिवास्तवमेंकोईव्नहींकियागयाथा, बल्कियहभीकियहमानतेहुएभीकिभौतिकव्केअर्थमेंकोईव्कियागयाथा, फिरभीव्ऐसानहींथाजोइसतथ्यकोध्यानमेंरखतेहुएकियहकिसीभीस्थितिमें, एकआकस्मिकदायित्वकोपूराकरनेकेलिएकियागयाव्था, संबंधितलेखावर्षकेलाभोंकेखिलाफखंडकेतहतभत्तेकेरूपमेंदावाकियाजासकताथा।श्रीएस. अयंगर, जोन्यायाधीशकीओरसेपेशहुए, नेप्रश्नकेदायरेकोइतनाबढ़ायाजानेपरआपत्तिजताईऔरउन्होंनेन्यायाधिकरणकेअपीलीयआदेशकाउल्लेखकियाजोएकहीआधारपरआगेबढ़ाथा।विभागकीओरसेपेशहुएविद्वानमहान्यायवादीनेतुरंतप्रश्नकाउत्तरदेनेमेंकठिनाईकोस्वीकारकिया, लेकिनतर्कदियाकिप्रश्नकाउत्तरउसकेवर्तमानरूप मेंदियाजासकताहै, हालांकिउन्होंनेसहमतिव्यक्तकीकियदिवहऐसानहींकरसकताहै, तोन्यायालयऐसाकहनेकेलिएस्वतंत्रहोगा। 972 सर्वोच्चन्यायालयकीरिपोर्ट[1959] पूरक। 1959 हमयहकहनेमेंमददनहींकरसकतेकिहालांकिन्यायाधिकरणभारतीयकोकिसीमामलेकाफैसलाकरनेकेलिएस्वतंत्रहोसकताहैजैसाकिउसेसबसेअच्छालगताहै, मोलासेसकंपनीकोकरदाताओंकेलिएकाफीकठिनाईहोतीहै, अगरकानूनके(निजी) Ltd.questions कोटुकड़ोंमेंतयकियाजाताहैऔरबार-बारV. उच्चन्यायालयकेसंदर्भ-आवश्यकहैं।न्यायशास्त्रउच्चन्यायालयकाआयुक्तशब्दकोषआयकरकासलाहकारऔरपरामर्शीहै। . पश्चिमबंगालऔरइसक्षीणरूपमेंकानूनकीव्याख्याकेप्रश्नोंसेअच्छीतरहसेबचाजासकताहै।इससेजेहिदायतुल्लामुकदमेकीअवधिमेंकटौतीकरेंगे। यहतयकरनेमेंकिएकमुश्तभुगतानऔर Case: INDIAN MOLASSES CO. (PRIVATE) LTD. versus THE COMMISSIONER OF INCOME-TAX, WEST BENGAL. [[1959] SUPP. 2 S.C.R. 964] (1959) The Commissioner " It w'ill be noticed that three ingredients of the clause lie on the surface of its language. In order that a deduction may be claimed under its provisions, it must be proved first that there was an expenditure, secondly, that the expenditure was not in the nature of a capital expenditure-I am leaving ·aside the per-sonal expenses-and, thirdly, that it was laid out or expended wholly and exclusively for the purposes of the assessee's business-I am leaving out profession or vocation. " We must not be understood as finding fault with the Divisional Bench. It decided the question as framed. It is the Tribunal which referred the ques-tion in this form, keeping to itself the right to decide about the other ingredients of the clause later. \Vhether the question can be answered in the bland form it is posed, is a matter to which we will have to address ourselves presently. But it appears to us that this is a very unsatisfactory way to go about the business. Perhaps, the Tribunal decided this case in this way and referred the question it did, because it felt that if this Court in Allahabad Bank Ltd. v. Com-missioner of Income-tax, West Bengal ([1 ]) was able to decide whether a particular outlay was ' expenditure ' without reference to the other ingredients of cl. (xv), the same could be done in this case also. That case, however, was very different in its facts. Thero, certain contributions on trust for payment of pensions to employees were held not to be ' expenditure ', because on the original trust failing, the money was (t) (1954] S.C.R. 195. (2) S.C.R. SUPREME COURT REPORTS 971 deemed to be held by the trustees on a resulting trust r959 for the benefit of the maker. If the same can be said The Indian in this case, namely, that the money con~inued to Molasses co. belong to the assessee Company 'in the account years, (Private) Ltd. its payment to the trustees or the Insurance Company v. notwithstanding, there may be a possibility of answer- The Commissioner ing the question as was done in the decision of this of Income-tax, C our t 01 [·t·d ]e ear 'l' ier. B t u I 'f sue h a c ear-cu proposi-l t . West Bengal tion cannot be laid down, then, obviously, there is Hidayatullah J. considerable difficulty in deciding what is 'expendi-ture ' within the clause, without reference to the rest of its provisions. Of course, to find the meaning of the word 'expenditure ', a dictionary is all that is needed, but to go further and to decide whether the outlay in this case was ' expenditure ', the context in which the word is used in the clause cannot success-fully be left out. Mr. Sampath Iyengar for the assessee Company complained before us of the narrowness of the ques-tion, though before the High Court he was opposed to any extension of the ambit of the question. The following passage from the judgment of the Chief Justice shows the respective attitud~s of the Depart-ment and the assessee Company before the Bench: "Mr. Meyer contended that that language entitled him to argue not only that there had been no expen-diture in fact at all, but also that even assuming that there had been an expenditure in the sense of a physi-cal spending, still the expenditure was not such as could be claimed as an allowance under the clause against the profits of the relevant accounting year in view of the fact that it was, in any event, an expenditure made to meet a contingent liability. Mr. S. Iyengar, who appeared on be'half of the asses-see, objected to the scope of the question being so enlarged and he referred to the appellate order of the Tribunal which had proceeded on a single ground. " The learned Attorney-General who appeared for the Department at once conceded the difficulty of answer-ing the question, but contended that the question in its present form could be answered, though he agreed that if it could not, the Court would be free to say so. 972 SUPREME COURT REPORTS [1959] Supp. r959 Case: INDIAN MOLASSES CO. (PRIVATE) LTD. versus THE COMMISSIONER OF INCOME-TAX, WEST BENGAL. [[1959] SUPP. 2 S.C.R. 964] (1959) 1959 हमयहकहनेमेंमददनहींकरसकतेकिहालांकिन्यायाधिकरणभारतीयकोकिसीमामलेकाफैसलाकरनेकेलिएस्वतंत्रहोसकताहैजैसाकिउसेसबसेअच्छालगताहै, मोलासेसकंपनीकोकरदाताओंकेलिएकाफीकठिनाईहोतीहै, अगरकानूनके(निजी) Ltd.questions कोटुकड़ोंमेंतयकियाजाताहैऔरबार-बारV. उच्चन्यायालयकेसंदर्भ-आवश्यकहैं।न्यायशास्त्रउच्चन्यायालयकाआयुक्तशब्दकोषआयकरकासलाहकारऔरपरामर्शीहै। . पश्चिमबंगालऔरइसक्षीणरूपमेंकानूनकीव्याख्याकेप्रश्नोंसेअच्छीतरहसेबचाजासकताहै।इससेजेहिदायतुल्लामुकदमेकीअवधिमेंकटौतीकरेंगे। यहतयकरनेमेंकिएकमुश्तभुगतानऔर प्रीमिया'व्' नहींथा, जैसे-जैसेमामलाआगेबढ़तागया, अलग-अलगविचारव्यक्तकिएगए।आय-करअधिकारीनेअभिनिर्धारितकियाकिसेवाकीशर्तों, पारिश्रमिकआदिकोशामिलकरनेवालेलिखितसमझौतेकेअभावमें, व्यवस्थाकोकेवलउपदानकेप्रावधानकेरूपमेंलियाजासकताहै, क्योंकिहार्वेकेनिधनकीस्थितिमेंश्रीमतीहार्वेकोवार्षिकीकेभुगतानकेलिएन्यासविलेखमेंएकप्रावधानथा।उनकेअनुसार, निर्धारितधनकेवितरणकेलिएइतनीसारीवैकल्पिकव्यवस्थाएँथींकियहकहनाअसंभवथाकिवार्षिकीअंततःकिसआकारमेंआएगीऔरजबतककुछघटटनाएँनहींहोतीं, तबतक'व्' प्रभावीनहींथा।इसलिए, एथथर्टनबनामकेमामलेकाअनुसरणकरें।ब्रिटिशइंसुलेटेडऔरहेल्सबीकेबल्सलिमिटेड(1) औरहैनकॉकबनामकोअलगकरतेहुए।जनरलरिवर्सनरीएंडइन्वेस्टटमेंटटकंपनीलिमिटेड(ए), कटौतीकेदावेकोआयकरअधिकारीद्वाराखारिजकरदियागयाथा। अपीलीयसहायकआयुक्तनेमानाकिसमझौतेकेअभावमेंभुगतानकोपूंजीगतप्रकृतिकाअनुग्रहभुगतानमानाजानाचाहिए, जबतककिन्यासहस्तक्षेपकरताहै।अपीलीयसहायकआयुक्तनेभीटिप्पणीकी श्रीमतीहार्वेकीपेंशनकेलिएएकप्रावधानकाअस्तित्व जोसमझौतेकाहिस्सानहींहोसकताथा।इसप्रकारउनकीरायथीकिमामलाएथथर्टनकेमामले(1) मेंनिर्धारितनियमकेभीतरआताहै।न्यायाधिकरणकीयहरायजोपहलेहीपुनःप्रस्तुतकीजाचुकीहै, जल्दहीयहहुआकिअभीतककोई'व्' नहींहुआथाऔरयहकेवलएक'व्' केलिएधनकाआवंटटनथा, जोभविष्यमेंहोभीसकताहैऔरनहींभी।उच्चन्यायालयनेविलेखकीशर्तोंकाविश्लेषणकिया ( 1 ) ( 1925 ) 10 टैक्सकैस।155 .( 2 ) ( 1918 ) 7 टैक्सकैस।358 . ( 2 ) एस. सी. आर. सर्वोच्चन्यायालयकीरिपोर्ट 973 विश्वासकरें, औरइंगितकियाकिदोदलथे 1959 सीज़जिसमेंपैसेगधोंकोवापसकरनेकीसंभावनाथी दइंडियन कंपनीदेखें।पहलीआकस्मिकतायहथीकियदिदोनोंहर मोलासीसकंपनीवेऔरश्रीमतीहार्वेकीमृत्यु20 सितंबर, 1955 सेपहलेहोगईथी।( प्राइवेटट) लिमिटेड।दूसरीआकस्मिकताएकचूककेकारणथी सी. एल.( III) हार्वेकोपेंशनप्रदानकरनेकेलिए, यदिश्रीमतीकमिश्नरहार्वेकीउपरोक्ततिथिसेपहलेमृत्युहोगई।उसस्थितिमें, आयकरकीस्थितिमें, न्यासविफलहोजाता, जबतककिपश्चिमबंगालकोसी. एल. केतहतएकनीतिनहींलीजाती।( II)।उच्चन्यायालयनेअभिनिर्धारितकियाकियदिकोईहिदायतुल्लाजे। इनदोपरिस्थितियोंमेंसेहुआ, तोवहाँकेपक्षमेंएकपरिणामीविश्वासहुआहोगा निर्धारितीकंपनी, औरयहउसकेद्वारानिर्धारितसभीधनकोवापसपानेकाहकदारहोता।हमेंयहांयहकहनाहोगाकिउच्चन्यायालयनेदोआकस्मिकताओंमेंसेदूसरीकेबारेमेंगलतीकीथीक्योंकिजोनीतिनिकालीगईथी, वहसभीतीनविकल्पों-केलिएप्रदानकीगईथी, औरपेंशनदोनोंयादोनोंउत्तरजीवीकोदेयथी, हालांकिअलगअलगराशियोंमें।यहांतककिन्यासविलेखमेंभीतीनवैकल्पिकपेंशननिम्नानुसारप्रदानकिएगएथेः£ 720 , यदिवार्षिकीअकेलेहार्वेकोदेयथी; या £ 558-1-0 , दोनोंयाउत्तरजीवीकेसंयुक्तजीवनकेदौरान; याश्रीमतीहार्वेको£ 611-12-0, यदिहार्वेकीमृत्यु20 सितंबर, 1955 सेपहलेहोगईथी।हालाँकि, पॉलिसीमेंविशेषप्रावधान20 सितंबर, 1955 सेपहलेमरनेवालेदोनोंसंभावितवार्षिकीकर्ताओंकीपहलीआकस्मिकताकोशामिलकरताहै, औरयदिऐसाहोताहै, तोनिर्धारितीकंपनीको20 सितंबर, 1955 सेपहलेतीसदिनोंकेभीतरबीमाकंपनीद्वाराआत्मसमर्पणकरनेकेइरादेकीलिखितसूचनाकेअधीन10,169 पाउंडकीराशिवापसमिलजाएगी। उच्चन्यायालयनेतबयहभीकहाकि खर्चकेलिएकोई'तत्कालआवश्यकता' नहींथी, नहीपैसा6 एकतत्कालचरित्रकेव्यावसायिकउद्देश्यकेलिएनिर्धारितकियागयाथा, नहीयहएकवर्तमानसंपत्तिमेंलायागयाथाजोहमेशाउसरूपमेंएकसंपत्तिबनीरहेगी, पैसाहमेशाकेलिएचलागयाहै।उच्चन्यायालयनेकहाकिकंपनीकेपक्षमेंविश्वासहोनेकीसंभावनाहमेशाबनीरहतीहैऔरइसलिएयहनहींमानाजासकताकिधनकोपूर्वलंबितरखागयाहै।इसलिए, उच्चन्यायालयकानिष्कर्षयहथाकिनिर्धारितीकंपनीको • 974 सर्वोच्चन्यायालयकीरिपोर्ट[1959] पूरक। '' अस्थायीरूपसेएकराशिअलगरखेंताकि 1959 यह'उपदान' केभुगतानकेलिएउपलब्धहोसकताहै। दइंडियन हार्वेऔरश्रीमतीहार्वेकेलिए, लेकिनकोईपेशेवरनहींहै मोलासीसकं। कीस्थितिमेंधनकेउपयोगकेलिएदृष्टि ( प्राइवेटट) लिमिटेड। वेआकस्मिकताएँजोनहींहोरहीहैंऔरकोईवार्षिकीनहींहै .वी आयुक्तकिसीकोभीदेयथा, इसमेंकोई'व्' नहींथा -आयकर, 'शब्दकाकोईभीवास्तविकऔरव्यावहारिकअर्थ। पश्चिमबंगाल इसअपीलमेंदलीलेंबहुतव्यापकक्षेत्रपरहैं, जैसाकिउन्होंनेउच्चन्यायालयकेसमक्षकियाथा।नहीं। उनकापालनकरनेमेंउपयोगीउद्देश्यपूराहोगा। उनकेसभीआंदोलनोंकेमाध्यमसे।मुख्यबिंंदु Case: INDIAN MOLASSES CO. (PRIVATE) LTD. versus THE COMMISSIONER OF INCOME-TAX, WEST BENGAL. [[1959] SUPP. 2 S.C.R. 964] (1959) The learned Attorney-General who appeared for the Department at once conceded the difficulty of answer-ing the question, but contended that the question in its present form could be answered, though he agreed that if it could not, the Court would be free to say so. 972 SUPREME COURT REPORTS [1959] Supp. r959 r959 We cannot help saying that though the Tribunal may Th, Indian be at liberty to decide a case as appears best to it, Molasses Co. there is considerable hardship to the tax-payers, if (Private) Ltd. questions of law are ·decided piecemeal and repeated The C 0'"'""·"0"" [v. ][. . ]d' references to t' f th the H' High Court h C t . are d . necessary. d The 1 juris-. of Inconie-tax. IC 10n o e Ig our IS a visory an consu tative, west Brngol and questions of interpretation of the law in this attenuated form can well be avoided. This will tend Hidayatullah J. to cut down the duration of litigation. In deciding that the payment of the lump sum and premia was not 'expenditure ', different views were expressed as the case progressed. The Income-tax Officer held that in the absence of a written agreement covering the conditions of service, remuneration, etc., the arrangement could only be taken as a provision for a gratuity, more so as there was a provision in the deed of trust for payment of an annuity to Mrs. Har-vey in the event of Harvey's demise. According to him, there were so many alternative arrangements for the disbursement of the money laid out, that it was impossible to say what shape the annuity would ulti-mately take and till certain events happened, the ' expenditure ' w!ts not effective. Following, therefore, the case in Atherton v. British Insulated and H elsby Cables, Ltd. ([1 ]) and distinguishing Hancock v. General Reversionary and Investment Co. Ltd. ('), the claim for deduction was rejected by the Income-tax Officer. The Appellate Assistant Commissioner considered that in the absence of an agreement the payment must be regarded as an ex gratia payment of a capital nature, so long as the trust intervened. The Appellate Assistant Commissioner also commented upon the existence of a provision for Mrs. Harvey's pension which could not be a part of the agreement. He was thus of the opinion that the case fell within the rule laid down in Atherton's case (1). This opinion of the Tribunal which has already been reproduced earlier, was shortly that there was no 'expenditure' yet and this was only an allocation of funds for an 'expenditure', which might or might not be incurred in the future. The High Court analysed the terms of the deed of (1) (1925) 10 Tax Cas. 155. (2) (1918) 7 Tax Cas. 358. (2) S.C.R. SUPREME COURT REPORTS 973 Case: INDIAN MOLASSES CO. (PRIVATE) LTD. versus THE COMMISSIONER OF INCOME-TAX, WEST BENGAL. [[1959] SUPP. 2 S.C.R. 964] (1959) 1959 यह'उपदान' केभुगतानकेलिएउपलब्धहोसकताहै। दइंडियन हार्वेऔरश्रीमतीहार्वेकेलिए, लेकिनकोईपेशेवरनहींहै मोलासीसकं। कीस्थितिमेंधनकेउपयोगकेलिएदृष्टि ( प्राइवेटट) लिमिटेड। वेआकस्मिकताएँजोनहींहोरहीहैंऔरकोईवार्षिकीनहींहै .वी आयुक्तकिसीकोभीदेयथा, इसमेंकोई'व्' नहींथा -आयकर, 'शब्दकाकोईभीवास्तविकऔरव्यावहारिकअर्थ। पश्चिमबंगाल इसअपीलमेंदलीलेंबहुतव्यापकक्षेत्रपरहैं, जैसाकिउन्होंनेउच्चन्यायालयकेसमक्षकियाथा।नहीं। उनकापालनकरनेमेंउपयोगीउद्देश्यपूराहोगा। उनकेसभीआंदोलनोंकेमाध्यमसे।मुख्यबिंंदु निर्धारितीकंपनीकीओरसेआग्रहकियागयाहैकिपेंशनकाभुगतानएकराजस्वचरित्रकाखर्चहैऔरइसलिएऐसीपेंशनकाभुगतानकरनेकेलिएआवर्तीदायित्वसेछुटटकारापानेकेलिएएकमुश्तराशिकाभुगतानभीकियाजाताहै।यहकुछअंग्रेजीमामलोंसेसचित्रहै, औरCh काभीसंदर्भदियागयाहै।अधिनियमकाIX-B।यहभीप्रस्तुतकियाजाताहैकिजहांतकनिर्धारितीकंपनीद्वाराभुगतानकीबातहै इसकासंबंधथा, यहवास्तवमेंबनायागयाथा, औरयहशब्दकोशकेअर्थकेभीतर'व्' था '' शब्दको।विभागकातर्कहैकिव्काअर्थएकउपार्जितदायित्वकेलिएधननिकालनाहैनकिएकआकस्मिकदायित्वकेलिए, जोआकस्मिकताहोसकतीहैयानहींभीहोसकतीहै; किवर्तमानव्यवस्थाकेवलएकआकस्मिकदायित्वकेलिएऔरदायित्वतककेलिएधनकीएकअलगव्यवस्थाथी। यहवास्तविकहोगया, कोईखर्चनहींहुआ।हालांकि, निर्धारितीकंपनीकाकहनाहैकिबीमापरखर्चआकस्मिकनहींहै, क्योंकिहालांकियहजीवनसेसंबंधितहैऔरइसपरनिर्भरकरताहै, लेकिनबीमांकिकगणनाओंपरसंभावितराशिकाअनुमानलगायाजारहाहैऔरखर्चवास्तविकहै।दोनोंपक्षबड़ीसंख्यामेंअंग्रेजीनिर्णयोंपरनिर्भरहैं।अबहमतर्कोंपरविस्तारसेविचारकरेंगेऔरउनअधिकारियोंकोसंदर्भितकरेंगे, जोप्रासंगिकहैं। अंग्रेजीमेंव्याख्याकरनेवालेमामलोंसेनिपटटनेमें -आओकरकानून, यहहमेशाध्यानमेंरखाजानाचाहिएकिवहाँकानूनकीयोजनाहमारेदेशकीतरहनहींहै।इसमेंकोईसंदेहनहींहैकिउनसेसावधानीकेसाथथएकनिश्चितमात्रामेंसहायतालीजासकतीहै, लेकिनहमारेआयकरकानूनोंकेतहतसमस्याओंकोअंतिमविश्लेषणमें, हमारेकानूनोंकेसंदर्भमेंहलकियाजानाचाहिए। ( 2 ) एस. सी. आर. सर्वोच्चन्यायालयकीरिपोर्ट 975 अंग्रेजीकानूनकेतहतयह