Law: Income Tax Act, 1961

Section: 37

Income-Tax----Business expenditure ---Assessee carrying on business of curing of coffee, steamer agency, clearing and forwarding agency---Expenditure incurred on foreign travel of wife of chief executive---Tribunal finding that no material to show that travel was for my other purpose other than business purpose--¬Expenditure was incurred for foreign travel of assessees employee and wife of employee and not wife of its own partner or director---Tribunal limiting disallowance of expenditure to fifty per cent of amount claimed since foreign visit might have social aspects also---Justified---Indian Income Tax Act, 1961, S.37(1): For the assessment year 1985-86, the assessee-company engaged in the business of curing of coffee, steamer agency, clearing and forwarding agency, claimed deduction of Rs:2,08,465 as business expenditure on foreign travel which included Rs.33.796 incurred on the tour of the wife of the chief executive of the ,assessee-company. The Assessing Officer disallowed the claim for deduction on the ground that the expenditure was incurred for non-¬business purposes. The Commissioner (Appeals) affirmed the order of the Assessing Officer. On further appeal, the Tribunal took the view that the wife of the chief executive accompanied him in the business travel and that there was no material to show that her travel was for any other purpose other than business, that the modern trend was that the senior executives were accompanied by their wives on visits for business purposes, that, however, since the visit might have some social aspects also, the entire amount could not be allowed as deduction and, therefore, the Tribunal disallowed 50 per cent of the amount of Rs.33,796. On a reference: Held that the Tribunal had found that the travel was undertaken by the wife of the senior executive only for the purpose of business. This was a case where the assessee had incurred expenditure for the travel of its employee and the wife of the employee and not the wife of its own partner or director. It was under these circumstances that the Tribunal took the view that when the assessee permitted such travel, in the absence of contrary evidence, it had to be taken that…

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