COMMISSIONER OF INCOME-TAX Vs. SARASWATI INDUSTRIAL SYNDICATE

JUDGEMENT

(1.) THE following question of law has been referred to us for opinion : "whether, on the facts and in the circumstances of the case, the amount of Rs. 250 paid on account of professional tax was allowable as a deduction in the assessee's assessment ? "

(2.) THE Saraswathi Industrial Syndicate, Yamunanagar, District Ambala, the assessee, is a public limited company. The assessment year is 1959-60, the relevant accounting period being the year ending 31st August, 1958. The assessee claimed a deduction of Rs. 250 which was paid by it on account of professional tax. Both the Income-tax Officer and the Appellate Assistant Commissioner disallowed this amount in view of the provisions of Section 10 (4) of the Indian Income-tax Act, 1922 (hereinafter called "the Act" ). The Appellate Tribunal, however, held it to be an allowable deduction, because the assessee had to pay this tax in order to carry on its business. This finding was given relying on the decision of the Allahabad High Court in Simbholi Sugar Mills Ltd, v. Commissioner of Income-tax, [1962] 45 I. T. R. 125 (All. ). The Commissioner of Income-tax then made an application requiring the Tribunal to refer certain questions of law to this court for opinion. The Tribunal, however, referred only the abovementioned question.

(3.) THE assessee paid this tax under the Punjab Professions, Trades, Callings and Employments Act, 1956, and it claimed this deduction under Section 10 (2) (xv) of the Act. The relevant part of Section 10 reads: "10, Business.-- (1) The tax shall be payable by an assessee under the head ' Profits and gains of business, profession or vocation' in respect of the profits and gains of any business, profession or vocation carried on by him. (2) Such profits or gains shall be computed after making the following allowances, namely : -. . . . (xv) any expenditure (not being an allowance of the nature described in any of the Clauses (i) to (xiv) inclusive, and not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of such business, profession or vocation. "