CENTRAL DISTILLERY AND CHEMICAL WORKS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE are two connected references, one of them being under Section 66(2), Income-tax Act and the other under Section 21, Excess Profits Tax Act. The facts given in the statement of the case as also in the Appellate Order of the Tribunal related only to the Income-tax reference and no facts have been given as regards the reference made under Section 21, Excess Profits Tax Act.

(2.) THE two questions that have been referred to us for decision are as follows :

(3.) IN the relevant assessment year 1945-46, the corresponding accounting period of which was 1-10-1943 to 30-9-1944, a sum of Rs. 34,582/- was payable to the Managing Agents as remuneration and commission. The question arose whether the assessee company could claim deduction of this amount as amount "wholly and exclusively" expended for the purpose of the business. The ground on which the claim' was disallowed was that since there was a Controller appointed by the Government the Managing Agents had no work to do and, therefore, it could not be said that the amount was wholly and exclusively spent for the purpose of the business.