COMMISSIONER OF INCOME TAX Vs. SHARMA AND CO

JUDGEMENT

(1.) I agree that the question should be answered in the affirmative but solely on the ground that the Tribunal has recorded a finding of fact that "this amount was received by the assessee firm as an allowance for the purposes of reimbursement of advertisement and other expenses." The question referred to us is not whether this finding is supported by evidence or not and consequesntly we have to take it as binding upon us. Whether there is a special allowance specifically granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office is a question of fact and in regard to a finding on it the only question of law that can possibly arise is whether there was any material which could justify it. The question referred to us is whether on the facts and in the circumstances of the case the amount was exempt under Section 4(3)(vi) of the Income-tax Act. The facts and circumstances of the case in-clude the findings of fact because they are binding upon us. In view of the finding of fact recorded by the Tribunal the question must be answered in the affirmative. I reserve my opinion upon the question whether Section 4(3) (vi) does not require that the special allowance must have been granted after the expenses have been incurred wholly and necessarily in the performance of the duty or that the special allowance if given in advance must have actually been spent wholly and necessarily in the performance of the duties of an office.

(2.) THE assessee, an unregistered Jinn, carried on Business as the sole selling agent of the Kanpur Cotton Mills. Besides being their sole selling agent, it also managed their retail cloth shop. During the previous year relevant to the assessment year 1948-19 is received a sum of Rs. 67,597/5/9 from the Kanpur Cotton Mills for the purpose, it is claimed, of meeting the expenses in connection with the management of the retail cloth shop. This sum was duly credited in the profit and loss account under the entry "Retail Cloth shop expenses". Although the assessee received Rs. 67,597/5/9 for this purpose, it actually expended Rs. 12,641/- only, leaving a surplus of Rs. 54956/-. In the assessment proceedings before the Income-tax Officer it claimed that the entire sum of Rs. 67,597/- was exempt from inclusion in its total income under Section 4(3) (vi) of the Indian Income-tax Act, which at the relevant time stood as follows:

(3.) THE Appellate Tribunal has found that the sum of Rs. 67,597/5/9 was paid by the Kanpur Cotton Mills to the asseasee for the purpose of meeting the expenes of managing and running the retail cloth shop. If the true scope of Section 4(3) (vi) is to provide for the exemption of an amount paid to an assessee for the purpose of meeting expenses incurred in the performance of the duties of his office or employment of profit, without regard to the amount of expenditure actually incurred by the assessee, mere can be no dispute that the instant case would be covered by that provision. But learned counsel for the commissioner contends that in order to enjoy the benefit of Section 4(3)(vi) the asssssee must establish that not only has it received the amount as a special allowance, benefit or perquisite but that the amount of the grant was equal to the amount of expenses actually incurred by the assessee.