COMMISSIONER OF INCOME TAX Vs. MALAYALAM PLANTATIONS LIMITED

JUDGEMENT

(1.) THIS is a reference under section 66(1) of the Indian Income-tax Act, 1922, and the question referred for decision is :

(2.) THE assessee is a public limited company registered in England which owned tea, rubber and cardamom estates in Travancore and other places. In its books, it had an account entitled Employees Deposit and Retirement Fund, which may be referred to as the Fund, and into which were periodically credited, contributions from the assessee to its employees who are its members, and also from such employees themselves. For the assessment year 1122, M. E., relating to the accounting year ended 31st March, 1946, the assessee claimed a deduction of Rs. 7,009 out of its agricultural income from cardamom and rubber by way of contributions it had made to the Fund, and for the assessment year 1124, M. E., relating to the accounting year ended 31st March, 1948, it claimed a similar deduction of Pounds 3,341. THE deductions were disallowed by the Income-tax Officers and in appeal by the Appellate Assistant Commissioners for the relevant years. When the matter came on appeals before the Income-tax Appellate Tribunal, they were allowed on the ground that the income out of which the contributions were made being agricultural income was not assessable to income-tax under the Travancore Income-tax Act, 1121, which may be referred to hereafter as the Act. This view was plainly wrong for agricultural income was assessable under section 14 of the Act.

(3.) UNDER the above rules the deposit in the Fund or the contribution to it made by the assessee to each of the members of the Fund is additional remuneration to him and so the expenses incurred by the assessee on this account constitute part of the remuneration paid to its employees who are members of the Fund.