JUDGMENT V. BHARGAVA, C.J. - The question referred for our opinion is whether, on the facts and in the circumstances of the case, the payment of Rs. 56,000 made to the congress Parliamentary Board for the General Elections was an admissible expenditure under section 10(2)(xv) of the Income-tax Act.
The facts as they appear from the appellate order of the Tribunal and the statement of the case fall within a very narrow compass. It appears that, in connection with the General Elections which were to take place early in 1957, this sum of Rs. 56,000 was paid by the assessee-company to the U. P. Congress Parliamentary Board for its expenditure in the elections. At the time of the hearing of the appeal before the Tribunal, it was contended in a general manner on behalf of the assessee that, with the changing pattern of the economic structure of society, it was in the interest of the company to keep the ruling party in power. The Tribunal having mentioned that this was the contention did not proceed to record any finding of fact whether this contention was accepted by it or not. On the other hand, the Tribunal, thereafter, immediately proceeded to deal with the case of Morgan v. Tale & Ltd., where a certain expense incurred in connection with political propaganda was allowed as an expenditure legitimately deductible on the ground of being wholly and exclusively for the purpose of the business. While endeavouring to see whether that case was applicable, the Tribunal Purported to record two findings of fact relating to the case of the present assessee. One finding was that there was definitely no threat against any of the property or assets of the assessee and the second finding was that there was no question of any nationalisation of cotton industries. Cotton industry was mentioned because the business of the assessee is a cotton industry. On these facts the Tribunal proceeded to record its opinion that the contribution made to the funds of the Congress Parliamentary Board had no bearing on the business of the assessee. These are all the facts that are found in the appellate order of the Tribunal and we are required to answer the question referred to us on these limited facts.
It will be seen from the recitation of the facts given by us above that the contention of the assessee was confined to a general ascertain that it was in the interest of the company to keep the ruling party in power because of the changing pattern of the economic structure of society. This is the only one assertion on which the assessee relied in order to claim that this contribution to the U. P. Congress Parliamentary Board was an expenditure laid out wholly and exclusively for the purpose of the business. Every expenditure which is in the interest of a company need not necessarily be held to be an expenditure laid out wholly and exclusively for the purpose of the business. In the present case, no additional facts have been put forward on behalf of the assessee to show how this expenditure was required for the purpose of either promoting the business of the company or of keeping it secure and running. On the other hand, the Tribunal has recorded a definite finding that there was no threat against any property or assets of the company and that there was no question of any nationalisation of the business of the assessee-company. In these circumstances, the facts found do not indicate any nexus between this contribution to the Congress Parliamentary Board and expenditure incurred for the purpose of the business. When there is no direct nexus between the business of the company and this contribution, it appears to be impossible to hold that the assessee-company discharged the burden of proof which lay on it to show that this expenditure was wholly and exclusively for the purpose of the business. In the circumstance, the question referred to us is answered against the assessee and in the negative. The assessee will pay the cost of the department. Learned counsels fee is fixed at Rs. 200.