COMMISSIONER OF INCOME TAX Vs. COMMONWEALTH TRUST LIMITED

JUDGEMENT

(1.) At the instance of the Revenue the following questions have been referred for the opinion of this court:-

(2.) Essential facts required to decide the point arising for consideration, are:- The assessee is a public limited company. It has been assessed by assigning the status, non resident. It carries on business in India. It owns six tile factories, a handloom textile unit, a powerloom textile factory and a hosiery factory. It has an office in London. While computing the assessable income for the years of assessment 1969-70 and 1970-71, the assessing authority allowed the claim of the assessee for deduction of a sum of Rs.18,000/-( 1000 per year), representing the pension amount paid to one of its former Managing Director, Mr. William Rae.

(3.) On the basis of the information received, the assessments were re-opened. While doing the reassessment, the assessing authority disallowed the above payments made to Mr. William Rae for the reason that the payments were not made with the object of facilitating the carrying on of the business of the assessee or as a matter of commercial expediency.