LexALLAHABAD BANK LTD. versus COMMISSIONER OF INCOME-TAX, WEST BENGAL.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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S.C.R.
SUPREME COURT REPORTS
195
appears to us to be apposite. It is unfortunate that
l953
the last mentioned case was not brought to the notice 0
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onimiasioner oJ
of the High Court before the Judgment under appeal
Income-tax,
was delivered.
West Bengal
Dissent has been expressed in the judgment under
appeal from the recent decision of the Bombay High
Court in New Shorrock Spinning and 1l1 anuf acturing
Co. Ltd. v. Commissioner of Income-tax, Bombay(').
The facts of that case are entirely different from the
facts of the case before us and that decision has no
manner of application to the present case. It is, there-
fore, unnecessary for us to discuss or express any
opinion as to whether the observations to be found in
the judgment in that case are or are not well-founded.
For reasons stated above, we accept this appeal and
hold that the answer to the question referred by the
Appellate Tribunal to the High Court should be in the
negative. The respondent company must pay the
costs of the appellant in this court as well as in the
High Court.
Appeal allowed.
Agent for the appellant: G. H. Rajadhyaksha.
Agent for the respondent: S. C. Banerjee.
ALLAHABAD BANK LTD.
v.
COMMISSIONER OF INCOME-TAX,
WEST BENGAL.
[PATANJALI SASTRI C.J;, S.R. DAS, VIVIAN BOSE,
GHULAM HASAN and BHAGWATI JJ.]
Income-tax Act (XI of 1922). s. 10 (2) (xv)-Contribntion lo
trust for payment of pension to employees-TVhether bitsiness expend-
iture-Payment of pension and amount thereof left to discretion of
employer-No obligation on tr·nstees to pny pension-Validity of
trust.
(1) [1950] 18 I.T.R. 712; A.I.R. 1950 Born. 39L
v.
Messrs.
J eewanlal Ltd.
DasJ.
1963
Oct. 8,
196
SUPREME COURT REPORTS
[1954]
1953
A banking company executed a deed whereby it purported to
create a trust for the payment of pensions to the retiring members
Allahabad Bank of its staff.
A certain sum of money was made over to three per·
Ltd.
sons who were called trustees and the deed provided that the com-
v.
pany may make further contributions to the fund. Under the terms
Commissioner 0! of the deed, however, the company was not bound to pay any pen-
Income-tax,
sion to any of the members of the staff, the payment itself and the
West Bengal.
amount vayable being entirely at the discretion of the company,
and the co1npany hacl also the power to witbdra.v.' or modify any
pension and to alter the rules relating to the granting of the pension
at its will.
In the accounting year the co1npany paid a further
contribution of Rs. 2 lacs to the fund and clahned deduction of this
amount under a. 10 (2) (xv) of the Income-tax Act as expenditure
laid out wholly and exclusively !or the purposes of the business:
Held, that, as the deed did not impose any obligation on the
bank or the trustees to gr1:tnt any pension to any employee, and the
pension, even if granted, could be withdrawn and even the i·ules
could be completely altered at will by the company, no valid trust
was created even though moneys had been transferred to the
trustees, and the sum in question could not be said to have been
spent for the purposes of the business and allowed as a deduction
under s. 10 (2) (xv).
Brown v. Higgs {32 E.R. 473) and B1'rrongh v. Philcox (41
E.R. 299) distinguished.
CIVIL
APPELLATE
JURISDICTION: Civil
Appeal
No. 161 of 1952.
Appeal from the Judgment and Order dated the 18th
May, 1951, of the High Court of Judicature at Calcutta
(Chakravartti and Das Gupta JJ.) in its Special Juris-
diction (Income-tax) in Income-tax Reference No. 63
,
(
of 1950.
,.
N. 0. Chatterjee (S. N. Mukherjee, with him) for the
appellant.
0. K. Daphtary, Solicitor-General for India (G. N.
Joshi, with him) for the respondent.
1953. October 8. The Judgment of the Court was
delivered by
BHAGWATI J.-This is an appeal from the judgment
and order of the High Court of Judicature at Calcutta
on a reference made by the Income-tax Appellate
Tribunal under Section 66(1) of the Indian Income-
tax Act (XI of 1922).
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S.C.R.
SUPREME COURT REPORTS
197
The appellant is a banking company carrying on
1963
business at, among other places, Calcutta and Allahabad. Allahabad Bank
On the 15th March, 1946, the appellant executed a deed
Ltd.
by which it purported to create a trust for the payment
v.
of pensions to the members of its staff.
The deed Commissioner of
declared that a pension fund had been constituted and
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