Wholly and exclusively, the expression 'wholly and exclusively' used in s. 10(2)(xv) of the Income Tax Act, 1922 does not mean 'necessarily'. Ordinarily it is for the assessee to decide whether any expenditure should be incurred in the course of his or its business. Such expenditure may be incurred voluntarily and without any necessity and if it is incurred for promoting the business and to earn profits, the assessee can claim deduction under s. 10(2)(xv) of the Act even though there was no compelling necessity to incur such expenditure. It is relevant to refer at this stage to the legislative history of s. 37 of the Income Tax Act, 1961 which corresponds to s. 10(2)(xv) of the Income Tax Act, 1922. An attempt was made in the Income Tax Bill of 1961 to lay down the 'necessity' of the expenditure as a condition for claiming deduction under s. 37. S. 37(1) in the Bill read 'any expenditure . . . laid out or expended wholly, necessarily and exclusively for the purposes of the business or profession shall be allowed . . . .'. The introduction of the word 'necessarily' in the above s. resulted in public protest. Consequently when s. 37 was finally enacted into law, the word 'necessarily' came to be dropped. The fact that somebody other than the assessee is also benefited by the expenditure should not come in the way of an expenditure being allowed by way of deduction under s. 10(2)(xv) of the Act if it satisfies otherwise the tests laid down by law, Sessoon J. David and Co. Pvt. Ltd. v. C.I.T., AIR 1979 SC 1441: (1979) 3 SCC 524: (1979) 3 SCR 878. [Income Tax Act (11 of 1922), s. 10(2)(xv)]
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