- (1.) IN civil Reference No. 5 of 1950 the question that has been referred for decision to this Court is: "whether there was material upon which the Tribunal could find that any portion of the salaries paid to Miss Florence Hotz and Mr. Edwin Hotz represented expenditure which was not expended wholly and exclusively for the purposes of business. "
(2.) IN considering the question referred to this Court for decision it has to be borne in mind that the claim of the assessee being a claim for exemption of an amount under Section 10 (2) (xv), income-tax Act, 1922, hereinafter referred to as the Act, the burden of proving the necessary facts in that connection is on the assessee. Authority for this proposition is to be found in 'commr. of Income-tax West Bengal v. Calcutta Agency Ltd', AIR (38) 1951 S C 108. ' In that case Kania, C. J. , said: "now it is clear that this being a claim for exemption of an amount, contended to be an expenditure falling under Section 10 (2) (xv), the burden of proving the necessary facts in that connection was on the assessee, it being common ground that the commission was due and had become payable and was, therefore, the business income of the assessee company liable to be taxed in the assessment year. "
(3.) BRIEFLY summarized the facts, so far as material, are these. The assessee is a trust which owns five hotels, including Cecil Hotel, Delhi and Cecil Hotel, Agra. Mr. Eobert Hotz is the Manager of the Cecil Hotel Delhi, and Mr. Edwin Hotz is the Manager of Cecil Hotel Agra, while Miss florence Hotz is the Chief Manageress of all the hotels. Originally the salaries paid to Mr. Robert Hotz, Mr. Edwin Hotz and Miss Florence Hotz were Rs. 1,200/- per mensem each. With effect from 1-3-1943, the salaries were Increased to Rs. 2,000/- per mensem each. For the 1943-44 assessment the Income-tax Officer allowed the claim for the increased salary paid in march 1943. For 1944-45 the Income-tax Officer allowed Rs. 1,600 / per mensem as against the claim of Rs. 2000/- per mensem each as a proper deduction in terms of Section 10 (2) (xv) of the act, and disallowed the balance of the claim amounting in all to Rs. 14,400/ -. On appeal the appellate Assistant Commissioner confirmed the order passed by the Income-tax Officer, holding that no further allowance was justified. For the 1945-46 assessment salaries amounting to Rs. 2,000/- per mensem in respect of Mr. Robert Hotz. , Miss Florence Hotz and Mr. Edwin hotz were claimed but the Income-tax Officer and on appeal the Appellate Assistant commissioner refused to allow more than Rs. 1,600/- per mensem each. For the 1946-47 assessent the Income-tax Officer found that the salaries of Rs. 1,600/- per mensem in the case of miss Florence Hotz and Mr. Edwin were fair, but that Mr. Robert Hotz, who was not provided with free board and lodging, was to be paid Rs. 2,000/-per mensem. On appeal, the Appellate assistant Commissioner confirmed the order of the Income-tax Officer. For the 1947-48 assessment the same question came up for determination. This time, however, the Income-tax officer allowed the full claim in respect of the salaries paid to Mr. Robert Hotz, Miss Florence hotz and Mr. Edwin Hotz. The Income-tax Department did not appeal from that assessment order. In the assessment of 1948-49 the Income-tax Officer found that pay of Rs. 1,600/- per mensem was ample in the case of Miss Florence Hotz and Mr. Edwin Hotz and allowed the pay of Rs. 2,000/- per mensem in the case of Mr. Robert Hotz. On appeal, the Appellate Assistant commissioner confirmed the order of the Income-tax Officer.;