Cholan Roadways Corporation Ltd. vs Commissioner of Income Tax

N.V . Balasubramanian, J.—At the instance of the Revenue, the following two questions of law have been referred by the Income Tax

Appellate Tribunal for the opinion of this court u/s 256(1) of the Income Tax Act, 1961, for the assessment year 1975-76 :

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that a sum of Rs. 79,800 paid by the

assessee was not revenue expenditure ? and

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the payment of Rs. 8,000 to the Tamil

Nadu Soldiers and Sailors and Airmen''s Board towards Flag Day Fund and Rs. 1 lakh to the Regional Transport Authority towards Chief

Minister''s Rehabilitation Fund for physically handicapped were not allowable deductions ?

In so far as the first question is concerned, learned counsel for the applicant has fairly stated that the issue involved in the question is covered by a

decision of this court in Anna Transport Corporation Limited and others Vs. Commissioner of Income Tax, against the assessee. Following the

said judgment, we answer the question referred to us in the affirmative and against the assessee in so far as the first question is concerned.

In so far as the second question is concerned, the question involves the deductibility of a sum of Rs. 8,000 paid by the assessee to the Tamil Nadu

Soldiers and Sailors and Airmen''s Board towards Flag Day Fund and a sum of Rs. 1 lakh to the Regional Transport Authority towards Chief

Minister''s Rehabilitation Fund for the physically handicapped. A similar question came up before this court in the case of Commissioner of Income

Tax Vs. Cheran Transport Corporation Ltd., , to which one of us was a party (Abdul Hadi J.), wherein it was held that the contribution to the Flag

Day Fund and the Chief Minister''s Rehabilitation Fund were not made in contravention of any law nor were they opposed to public policy and

hence the payments had been made for business purpose and were deductible. The above view was reiterated by the Supreme Court in the case

of M/s. Sri Venkata Satyanarayana Rice Mill Contractors Co. Vs. Commissioner of Income Tax, Andhra Pradesh, II, where a payment was made

to a public welfare fund by an assessee. Following the said decisions we answer the second question referred to us in the negative and in favour of

the assessee.