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1971 Supreme(Del) 37
High Court Of Delhi
COMMISSIONER OF INCOME TAX - Appellant
Versus
BHANNA MAL AND COMPANYPRIVATE LIMITED - Respondent
I.T.R. 42 of 1968
Decided On : 02/05/1971
B.Kirpal, G.C.Sharma
Expenditure incurred for the salary of a pujari (priest) who invoked the blessings of Gods and Goddesses for the benefit of the assessee is not an admissible deduction under Section 10(2)(XV) of the Income-tax Act, 1922.
Headnote:
INCOME TAX - Expenditure - Salary of pujari - Whether admissible deduction - Held, no.
Fact of the Case:
The assessee, a company, incurred expenses on the salary of a pujari (priest) who invoked the blessings of Gods and Goddesses for the benefit of the assessee. The Income-tax Officer disallowed the expenses as not being a deductable expense. The Appellate Assistant Commissioner confirmed the disallowance. On second appeal, the Income-tax Appellate Tribunal allowed the assessee's claim to deduct the said items as an admissible expense.
Finding of the Court:
The court held that the expenses in question were not an admissible deduction. The court observed that the expenses incurred for the salary of Pujari for invoking the blessings of God and Goddesses for prosperity has no relationship to the carrying on of the business by the assessee.
Issues: Whether the expenditure incurred by the assessee on the salary of a pujari (priest) was an admissible deduction under Section 10(2)(XV) of the Income-tax Act, 1922.
Ratio Decidendi: The court held that the expenses in question were not an admissible deduction under Section 10(2)(XV) of the Income-tax Act, 1922. The court observed that the expenses incurred for the salary of Pujari for invoking the blessings of God and Goddesses for prosperity has no relationship to the carrying on of the business by the assessee.
Final Decision: The question is answered in the negative in favour of the Revenue and against the assessee.
( 1 ) M/s Bhanna Mal and Company Private Ltd. , Delhi, the assessee, during the assessment year 1956-57 (for which the accounting year ended on October 25, 1955), spent a sum of Rs. 130. 00 in its Patna branch and Rs. 65. 00 in its Alwar branch over the salary of a pujari. who used to invoke the blessings of Gods and Goddesses of prosperity for the benefit of assessec. The Incometax Officer disallowed both these items as not being a deductable expense without assigning any reason. The assessee appealed. The Appellate Assistant Commissioner confirmed the dis-allowance observing that the assessee had failed to prove as to how these expenses we necessary for the purpose of running the business.
( 2 ) ON Second appeal, the income-tax Appellate Tribunal held that although such expenses might not be tangibly connected with the carrying on of the business, it had certainly an intangible bearing on it since to a God fearing man such expenses were expense which create a sense of security and prosperity and add to assessece s general capability to do better busines. Accordingly, the assessee s claim to deduct the said items as an admissible expenses was allowed On an application made by the Revenue, the following question has been referred under Section 66 (1) of the Income-tax Act. 1922 :
"whether on the facts and in the circumstances of the case, the expenditure of Rs. 130. 00 and Rs. 65- totalling to Rs. . 195. -. incurred by the assessee on account of the salary paid to a pujari (priest) was an admissible deduction ?"
( 3 ) IT is contended on behalf of the Revenue that Section 10 (2) (XV) of the income-tax Act. 1922, under which these expenses arc claimed, does not allow them. This section reads as under: "sec 10.
(1) The tax shall be payable by an assessee under the head (Profits and gains of business profession or vocation) in respect of the profits or gains of any (business, profession or vocation carried on by him. (2) Such profits or gains shall be computed after making the following allowances, namely :-- (xv) any expenditure, (not being an allowance of the nature described in any of the clauses (i) to (xiv) inclusives and. not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of such business, profession or vocation) :can these expenses be said to be wholly or exclusively for the purpose of the business of the assessee ? The import of the expression for the purpose of the business" was considered by the Supreme Court in Commissioner of Income-fax, Kerala v. Molayalam Plantation Ltd. . (1964) 53 I. T. R. 140 where it was observed at under :
"the expression "for the purpose of the business" is wider in scope than the expression "for the purpose of earning profits". Its range is wide: it may take in not only the day to day running of a business but also the rationalisation of its administration and modernisation of its machinery; it may include measures for the preservation of the business and for the protection of its assets and property from expropriation, coercive process or assertion of hostile title: it may also comprehend payment of statutory dues and taxes imposed as a pre-condition to commence or for the carrying on of a business; it may comprehend many other acts incidental to the carrying on of the business. How ever wide the meaning of the expression may be, its limits are implicit in it. The purpose shall be for the purpose of the business, that is to say, the expenditure incurred shall be for the carrying on of the business and the assessee shall incur it in his capacity as a person carrying on the business. "
( 4 ) THE Calcutta High Court in Indian Steel and Wire Products Ltd. v. Commissioner of Income-tax, West Bengal, (1968) 69 I. T. R. 379 (2) disallowed the contribution made by the assessee to the Indian National Congress for seeking the patronage of the political party in power for the preservation and further
