Law: Income Tax Act, 1922

Section: 66(1),10(2)(xvi)

Income-tax Act, 1922 -Sections 10(2)(xii), 10(2)(xiv), 10(2)(xv), 10(2)(xvi) - Business expenditure -Company -Directors sent abroad for training in pre-stressed concrete works -Travelling expenses incurred by company -Whether admissible deduction -Held yes -Scope and extent of applicability of different clauses explained - Business expenditure -Expenses incurred on account of sending Directors abroad for training -Finding that it were not for their personal benefit but of company -Deduction admissible - JUDGMENT ASIR J.-This is a Reference in terms of Section 66(1) of the Income-tax Act, 1922 at the instance of the Commissioner of Income-tax, East Pakistan, Dacca. The question involved in this reference turns on a simple point as to whether a sum of Rs. 7,700 spent on account of sending abroad two Directors of Messrs. The Engineers Limited, Dacca, to U.K., for training in prestressed concrete works for two months could be treated as an allowable deduction. The Income-tax Officer disallowed the claim of the assessee on the ground that the expenditure was of a capital nature which brought benefit of an enduring nature and that the scheme has not been endorsed by the Central Board of Revenue, Karachi. The Appellate Assistant Commissioner, however, found that it was necessary and useful for the appellants who were contractors for construction of buildings, bridges, etc., to impart this training to some of the Directors who were technical men. He also took the view that the expenses incurred were in the interest of the company's business. As such in his opinion the expenses were of revenue nature. He, therefore, allowed deduction in regard to the sum of Rs. 7,700 said to have been spent on account of purchasing two return Air tickets. The Tribunal also held that the two engineers were sent abroad not for their own personal benefit but for the benefit of the business concerned of the company itself. The Tribunal also found that the expenditure was not of capital nature and as such benefit of Section 10(2)(xvi) would be available to the assessee. Thereupon the Tribunal was required to state the case under Section 66(1) and the following questions have been referred to…

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