Income-tax---

----Business expenditure---Company---Special remuneration---Pension paid to widow of -Chairman---Not deductible---Indian Income Tax Act, 1961, S.37.

Held, (i) that the special remuneration paid to W.A. Watts E.O., Austin and others was not allowable as a deduction for the assessment years 1963-64 to 1968-69.

CIT v. Amalgamations (P.) Ltd. (1977) 108 ITR 895 (Mad.) fol.

(ii) that the pension to V was paid as a mark of respect to its departed chairman and not on commercial considerations. It was not deductible.

CIT v. Amalgamations Ltd. (1995) 214 ITR 399 (Mad.) fol.

P.P.S. Janarthana Raja for the Assessee.

S.V. Subramanian for C.V. Rai an for the Commissioner.

JUDGMENT

N.V. BALASUBRAMANIAN, J.---At the instance of the assessee, the Appellate Tribunal has referred the following common questions of law for the opinion of this Court under section 256(1) of the Income Tax Act, 1961:

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the remuneration paid to W.A. Watts E.O., Austin and others is not allowable as a business expenditure?

(2) Whether the Tribunal was right in holding that the pension paid to Mrs. Valli Anantharamakrishnan is not an allowable deduction?"

The assessment years involved in these tax cases are 1963-64 to 1968-69. In so far as the first question is concerned, the Appellate Tribunal has followed the decision of this High Court in the assessee's own case reported in CIT v. Amalgamations (P.) Ltd. (1977) 108 ITR 895 and has held that the special remuneration paid to W.A. Watts, E.O., Austin and others was not allowable as a deduction.

Mr. P.P.S. Janarthana Raja, learned counsel for the assessee, has fairly conceded that the decision of this Court in CIT v. Amalgamations (P.) Ltd. (1977) 108 ITR 895 would fully govern and apply to the facts of this case. Following the decision of this Court reported in CIT v. Amalgamtions (P.) Ltd. (1977) 108 ITR 895, we answer the first question referred to us in the affirmative and against the assessee.

In so far as the second question of law is concerned the issue relates to the deduction of the pension paid to one Mrs. Valli Anantharamakrishnan as a business expenditure. Mr. P.P.S. Janarthana Raja, submitted that this Court in the assessee's own case in the earlier year has considered the issue of deductibility of the allowance paid to Mrs. Valli Anantharamakrishnan and held that the pension paid was not an allowable deduction as a business expenditure on the ground that the pension was paid as a mark of respect to its departed chairman and not on commercial considerations. The above view was followed by another decision in CIT v. Amalgamations Ltd. (1995) 214 ITR 399 (Mad). Following the said decisions of this Court, we answer the second question also in the affirmative and against the assessee.

Accordingly, we answer both the questions of law referred to us in the affirmative and against the assessee.

M.B.A./4075/FC???????????????????????????????????????????????????????????????????????????????? Reference answered.