COMMISSIONER OF INCOME TAX Vs. BANGALORE ARRACK CO

JUDGEMENT

(1.) THIS reference under section 256(2) of the Income-tax Act, 1961 ("the Act" for short), involves the consideration of the following question referred to us :

(2.) THE question pertains to the assessment year 1982-83. THE respondent-assessee claimed deduction of a sum of Rs. 5 lakhs stated to have been paid by the assessee to one Shashidaran of Trichur so that Shashidaran's father, Mr. Chattunni Menon, would not compete as a bidder in the auction whereby the Excise Department of the Government of Karnataka was selling the right to vend arrack in certain shops. According to the assessee this sum was paid; and, therefore, a rival bidder was bought over and this was a business expenditure incurred by the assessee.

(3.) RE : Public Policy :