Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1987-88 - Assessee claimed deduction of foreign travel expenses of wives of directors of company - Whether since concurrent finding of facts of assessing authority, appellate authority and Tribunal was that no material was available to establish that expenditure incurred was for business purposes of assessee-company, claim was rightly disallowed - Held, yes FACTS The assessee-company claimed deduction of expenditure relating to foreign travel expenses of the wives of the directors of the company. The Assessing Officer disallowed the claim. The Commissioner (Appeals) confirmed the disallowance. The Tribunal agreed with the order of the Commissioner (Appeals). On reference : HELD The question as to whether the expenditure incurred on the foreign tour of a wife of the director of a company is an allowable deduction or not cannot be answered in the abstract. In appropriate cases depending on facts deduction as envisaged in section 37(1) is allowable and the requirement to be satisfied for such deduction is that the travelling was undertaken not for personal purposes but wholly and exclusively for the purpose of the business. The Court does not endorse the view that whenever the wife of the director of the company undertakes a foreign tour along with the director, it should be presumed that such foreign travel is wholly and exclusively for business purposes. Applying this principle to the facts of the instant case, no interference was called for with the concurrent finding of facts arrived at by the assessing authority, the appellate authority and the Tribunal that no material was available to establish that the expenditure incurred on the foreign tour of the wife of the director of the assessee-company was for its business purposes. [Para 5] The Tribunal was, therefore, right in holding that the expenditure incurred on the foreign tour of a wife of the director of a company was not an allowable deduction under the Act. CASES REFERRED TO CIT v. T.S. Hajee Moosa & Co. [1985] 153 ITR 422 / 22 Taxman 250 (Mad.) [Para 2], Bombay Mineral Supply Co. (P.) Ltd. v.…

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