COMMISSIONER OF INCOME TAX Vs. ANDERSON WRIGHT LTD

JUDGEMENT

(1.) THE question referred to us is as follows :

(2.) THE assessee-company appointed Gerald Joseph Feenan Hook as the manager of the assessee company. On 19th Nov., 1948, an agreement was entered into between the assessee and Hook, where it was agreed that the company would pay the manager a pension for life of 1,000 sterling per annum in London from 1st April, 1955, and in the event of his death provide a similar pension for his wife. By a deed of trust dt. 10th Feb.,1950, between Lloyds Bank Ltd., who were made the trustees, and the assessee company, a provision was made that the said Hook would be paid a pension for life and other benefits stipulated in the aforesaid agreement between Hook and the company. In order to provide for such pension the company undertook to pay annually the rupee equivalent of 2,546-13-0 until seven such annual payments inclusive of the initial payment were made to the trustees or until Hook's death, if earlier. In pursuance of this agreement the company paid the sum of Rs. 33,955 in the year of account, which is the asst. yr. 1954-55, and the accounting year ending 31st Dec., 1953.

(3.) BEFORE the Tribunal it was contended first that by cl. 14 of the 14th Nov.,1948 agreement, it was provided that on the dismissal of Hook the agreement was terminated and, therefore, in such circumstances pension was not payable to him and, secondly, it was contended, relying on the decision in Indian Molasses Co. Ltd. vs. CIT (1956) 29 ITR 565, that as nothing was provided for the contingency of the dismissal of Hook the trust would fail and the trustees could not provide for any annuity in such circumstnaces. the Tribunal held that though cl. 14 of the service agreement provided for dismissal of Hook, cl. 9 of the service agreement provided for payment of pension either on account of termination or earlier determination of service for any reason whatsoever and therefore even if Hook was dismissed he would be entitled to pension and there was no question of the trust amount reverting to the assessee and that there was no contingency.