(Civil Appeals Nos.581 to 586 of 1976 were by special leave from the judgment and order dated August 2, 1974, of the Madras High Court in T.C.No.235 of 1968. The judgment of the High Court is reported as C.I.T. v. T. Stanes and Co. Ltd. (1976)105 ITR 251 (Mad).

Income-tax--

----Business expenditure---Fund created for payment of pension to managing director and family---Surplus to be utilised for payment of pension to employees and dependants---Excess receipts over payments of specific pension carried to balance sheet---Excess payments over receipts charged to profit and loss account---Amount paid as pension to employees out of excess receipts from fund---Not allowable as deduction.

On the basis of certain agreements entered into between the appellant company and S, its managing director, the Stanes and Co. Staff Pension Fund, created chiefly for payment of pension to S. and his family, was to receive certain monies calculated on certain basis. The balance left after payment of the pension to S and his family was to be utilised by the fund for payment of pension to the other employees. The accounts of the fund were shown as part of the assessee's accounts. The surplus over the payments made was credited to the pension and gratuity fund and shown in the balance-sheet. The deficit was paid by the appellant and charged to its profit and loss account. The appellant claimed the actual amounts of pension paid as a deduction in its income-tax assessments. The Appellate Tribunal allowed the claim but the High Court, on a reference, held that the income or expenditure of the fund was neither the income nor the expenditure of the appellant and hence the amounts of pension paid by the appellant to the extent of the amount available with the fund was not allowable as an expenditure m the hands of the appellant. On appeal to the Supreme Court:

Held affirming the decision of the High Court, that there was no infirmity in the judgment of the High Court and no ground to interfere.

Decision of the Madras High Court in C.I.T. v. T. Stanes and Co. Ltd. (1976) 105 ITR 251 affirmed.

T.A. Ramachandran, Senior Advocate, (Mrs. Janaki Ramachandran, Advocate, with him), for Appellant.

B.B. Ahuja and Ms. A. Subhashini, Advocates, for Respondent.

ORDER

Civil Appeals Nos.581-586 of 1976: The following question was referred to the High Court by the Income-tax Appellate Tribunal under section 66(1) of the Indian Income-tax Act, 1922 (see C.I.T. v. T. Stanes and Co. Ltd. (1976)105 ITR 251, 257):

"Whether, on the facts and in the circumstances of the case, the assessee would be entitled to claim as deductions the sums of Rs.13,789, Rs.16,587, Rs.31,454, Rs.44,622, Rs.12,907 and Rs.15,570 respectively, for the assessment year 1959-60 to 1964-65, or any part thereof under section 10(2)(xv) or under the corresponding provisions of section 37 of the Income-tax Act of 1961?"

Keeping in view of the peculiar facts and circumstances of this case, the High Court answered the question partly in favour of the Revenue in the following terms (see p. 261):

"We, accordingly, hold that (1) in respect of the assessment years 1959-60 and 1960-61, the sums of Rs.13,789 and Rs.16,587 are not allowable deductions under section 10(2)(xv) of the Act, and (2) except to the extent of Rs.1,004, Rs.5,070, Rs.2,352 and Rs.6,716 referable to the excess of amounts paid over and above the income of the fund and which was charged to the profit and loss account in the assessment years 1961-62, 1962-63, 1963-64 and 1964-65, respectively, the balance of the amount in these assessment years are not allowable deductions."

We have heard learned counsel for the parties. We have been taken through the reasoning of the High Court on the basis of which the above quoted answer was rendered. We see no infirmity in the same. There is, thus no ground to interfere with the High Court judgment. The appeals are dismissed with no order as to costs.

(Civil Appeals Nos.3903-07 of 1983. 3897-3901 of 1983:

In view of our order in Civil appeals Nos.581-586 of 1976, these appeals are dismissed with no order as to costs.

1246/T.Appeals dismissed.