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" Mr. Meyer contended that language entitled him to argue not only that there had been no expenditure in fact at all, but also that even assuming that there bad been an expenditure in the sense of a physical spending, still the expenditure was not such as could be claimed as an allowance under the clause against the profits of the relevant accounting year in view of the fact that it was, in any event, an expenditure made to meet a contingent liability. Mr. S. Iyengar, who appeared on behalf of the assessee, objected to the scope of the question being so enlarged and he referred to the appellate order of the Tribunal which had proceeded on a single ground. "

The arguments in this appeal have ranged, as they did before the High Court, over a very wide field. No useful purpose will be served in following them through all their convolutions. The main points urged on behalf of the assessee Company are that payment of pension is an expenditure of a revenue character and so also the payment of a lump sum to get rid of a recurring liability to pay such pension. This is illustrated from some English cases, and reference is made also to Ch. IX-B of the Act. It is also submitted that in so far as payment by the assessee Company was concerned, it was, in point of fact, made, and this was I expenditure' within the dictionary meaning of the word. The argument of the Department is that by I expenditures meant a laying out of money for an accrued liability and not for a contingent liability, which contingency may or may not take place; that the present arrangement was only a setting apart of money for a Contingent liability and till the liability became real, there was no expenditure. The assessee Company, however, contends that expenditure on insurance is not contingent, because though the contingency relates to life and depends on it, the probabilities are great being estimated on actuarial calculations and the expenditure is real. Both sides rely on a large number of English decisions. We shall now consider the arguments in detail and refer to those authorities, which are relevant.

To be a payment which is made irrevocably there should be no possibility of the money forming, once again, a part of the funds of the assessee Company. If this condition be not fulfilled and there is a possibility of there being a resulting trust in favour of the Company, then the money has not been spent, i. e., paid out or away, but the amount must be treated as set apart to meet a contingency. There is a distinction between a contingent liability and a payment depending upon a contingency. The question is whether in the years of account, one can describe the assessee Company's liability as contingent or merely depending upon a contingency. In our opinion, the liability was contingent and not merely depending upon a contingency. That such a distinction is real was laid down in the speech of Lord Oaksey in Southern Railway of Peru Ltd. v. Owen (1), and was recognised generally in the speeches of the other Law Lords. Now, the question is what is the effect of the I payment of premia in the present case ? Learned counsel for the assessee Company referred us to the provisions of Chapter IX-B of the Act, particularly ss. 58R, 58S and 58V thereof. We regret we are not able to see bow these provisions help in the matter. We are not concerned with the provisions of this Chapter, because the allowance does not fall within any of the provisions, and we have only to decide the question whether the amounts -paid to purchase the policy involved an expenditure in the accounting years. Next learned counsel relied upon Joseph v. Law Integrity Insurance Company, Limited (2), Prudential Insurance Company v. Inland Revenue Commissioners (3 ) and In re National Standard Life Assurance Corporation (4) to show that there was no contingent liability but a liability depending on a contingency, namely, the duration of life, the probabilities of which were estimated on actuarial calculations. No doubt, these cases deal with insurance of human life but the observations therein are not material here. In the first of these cases, it was held that the kind of policies which were issued were policies of insurance on human lives, and that the company was carrying on the business of life insurance contrary to its memorandum of association and the policies were ultra vires the company. The policies were also illegal within s. I of the Assurance Companies Act, 1909.. In this context, the definition that I a policy of life insurance' means I any instrument by which the payment of monies, by or out of the funds of an assurance company, on the (1) [1957] A.C. 334.

These cases may help to determine the nature of the contract with the insurance company but cannot help in the solving of the question whether the payments to the insurance company were expenditure. That insurance of human lives involves a contingency relating to the duration of human life is a very different proposition from the question whether the payment in the present case to the trustees was towards a contingent liability or towards a liability depending on a contingency. In our opinion, the payment was not merely contingent but the liability itself was also contingent. Expenditure which is deductible for income-tax purposes is one which is towards a liability actually existing at the time, but the putting aside of money which may become expenditure on the happening of an event is not expenditure. In the present case, nothing more was done in the account years. The money was placed in the hands of trustees and/or the insurance company to purchase annuities of different kinds, if required, but to be returned if the annuities were not bought and the setting apart of the money was not a paying out or away of these sums irretrievably.