In the 1939 case of Haggar Company v. Helvering, Commissioner of Internal Revenue, the U.S Supreme Court ruled in favor of the Commissioner. The issue at hand was whether or not a corporation could deduct from its gross income amounts paid to a pension trust for employees as "ordinary and necessary" business expenses under section 23(a) of the Revenue Act. The company had established an employee pension plan and sought to deduct contributions made towards it from their taxable income. However, these deductions were denied by the IRS on grounds that they were capital expenditures rather than ordinary business expenses. The court held that such payments are not deductible as ordinary and necessary business expenses because they represent capital outlays intended to provide benefits over a long period in future years - thus falling into category of capital expenditure which is non-deductible according to tax laws at that time.

In the dissenting opinion for Haggard Company v. Helvering, it was argued that the majority's decision to allow a tax deduction for payments made by Haggar Company to its employees' pension fund was incorrect. The dissent contended that these payments should not be considered as ordinary and necessary business expenses because they were voluntary contributions rather than mandatory ones. Furthermore, it was pointed out that allowing such deductions could potentially lead to abuse of the tax system as companies might use this provision to evade taxes by making excessive contributions to their pension funds. Therefore, in order not only uphold fiscal integrity but also maintain fairness among taxpayers, the dissent believed that these types of payments should not qualify for tax deductions.