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Issues involved: Interpretation of rule 6D(2)(b) of the Income-tax Rules, 1962 for the assessment year 1980-81.
Summary: The case involved a dispute regarding the disallowance of certain expenses under rule 6D(2)(b) of the Income-tax Rules, 1962. The Income-tax Officer disallowed expenses based on the interpretation that incidental conveyance expenses should be considered. However, the Commissioner of Income-tax (Appeals) deleted the disallowances, which was upheld by the Tribunal. The main question referred to the court was whether the disallowance should be restricted to a certain amount. The court considered the arguments presented by both the Revenue and the assessee regarding the interpretation of rule 6D. The court analyzed rule 6D, which distinguishes between expenditure incurred outside and within India. It focused on whether the expression "including hotel expenses" in connection with travel should be limited only to daily allowances or cover other expenses like conveyance. The court emphasized that expenses on conveyance to and from the airport or railway station, in connection with business, should not fall under the purview of rule 6D. It clarified that clause (a) governs actual travel expenditure, including the entire journey from start to destination, encompassing various modes of transport. The court concluded that the Revenue misconstrued the rules, as clause (a) governs travel expenditure, not clause (b). It held that expenses for road transport from the airport or rail station to the hotel and back are admissible without the restriction of monetary limits in clause (b). The court also highlighted that the restriction in rule 6D pertains to expenses on stay and daily allowances, not other business-related expenses. Ultimately, the court ruled in favor of the assessee, stating that the expenditure claimed was reasonable and fell within the permissible limits set by the section and rule. In a separate judgment, Justice Bhagabati Prasad Banerjee concurred with the decision in favor of the assessee, resulting in no order as to costs.
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