A payment for political purposes may be for the purposes of the trade, but in such a case, the link between the trade and the payment had to be established.

( 1 ) THESE three references at the instance of the assessce, pertain to the assessment years 1958-59, 1960-60 and 1961-62. The common question of law, referred by the Tribunal for our opinion, is :

"whether on the facts and in the eimcumstances of the case. the payments of Rs. 5,67,000. Rs. 5,000 and Rs. 5,000 are permissible deductions under Section 10 (2) (xv)of the Indian Income-tax Act, 1922 for the assessment years 1958-59, 1960-61 and 1961-62?"

( 2 ) THE assessee-company runs a manufacturing unit. During the assessment, year 1958-59. it paid a sum of Rs. 5,67,000 to the Indian National Congress. It also made payments to the Indian National Congress of Rs, 5000 in each of the assessment years 1960-61 and 1961-62.

( 3 ) THE asscssee claimed these amounts as permissible deductions under Section 10 (2) (xv) of the Indian Income-tax Act. 1922. The asscssee contended before the Income-tax Officer that the donation to the Indian National Congress was incurred wholly and exclusively for the purpose of its business. The Income-tax Officer did not accept this contention, and disallowed the deductions.

( 4 ) ON appeal by the assessee. the Appellate Assistant Commissioner confirmed the view of the Income-tax Officer. On further appeal to the Income-tax Appellate Tribunal, the Tribunal concurred with the decision of the Appellate Assistant Commissioner. In coming to its conclusion, the Tribunal derived support from an earlier order passed by a Full Bench of the Tribunal dated 5th October, 1963, in I. T. A. No. 11907 of 1960-61. The Tribunal s viewpoint was that before an expenditure could be allowed as a permissible deduction, it must be established that the expenditure was for the purpose of the business, the purpose being such as would establish a positive link between the expenditure incurred and the assessee s business.

( 5 ) THE assessee s contention before the Tribunal was that the payments were made on grounds of commercial expediency. Three reasons were given in support of the contention. First, it was the return of the Congress Party to power in the Centre and States alone which would ensure stablised conditions in the country suitable for the conduct of business. Secondly, the assessee s business could not function properly unless the assessee retained the goodwill of the party which constituted the Government for the time being. Thirdly. the Ministers of the Congress Government had sought funds from the Company for the purpose of their election and other party expenses, and the management had no option but to comply with their wishes.

( 6 ) THE Tribunal found that the facts did not support the assessee s contention that the expenses were incidental to the conduct of the business or were necessitated or justified on grounds of commercial expediency. It held that there was no direct or intimate connection between the business and the expenditure.

( 7 ) MR. G. C. Sharma, learned counsel for the asscssee has formulated before us the following propositions,

1. A sum of money expended voluntarily on the ground of commercial expediency to indirectly facilitate the carrying on of the business, may be expended wholly and exclusively for the purposes of the trade. It is not necessary for such an expenditure to b-; directly related to the process involved in the carrying on of the business. 2. The expenditure may be admissible as a deduction under Section 10 (2) (xv) even if the primary motive for incurring it is not directly to earn income thereby.

( 8 ) LEARNED counsel, therefore, urges us to accept that the payment to the Indian National Congress was to indirectly further the trade, as it protected or advanced the business interest of the assessee.

( 9 ) THE argument appears to be attractive, but when examined B closely we find that it has been considered by this Court in Orissa Cement Ltd. v. Commissioner of Income-tax, Delhi, 73 I. T. R. 14 (1 ). and not accepted.

( 10 ) IN Orissa Cement Ltd. (supra), the assessee-c