2009 (7) TMI 92 - HC - Income Tax

Disallowance of foreign tour expenses without evidence traveling of wife commission paid to MD personal use of car The Assessing Officer disallowed foreign tour expenses of wife of the Managing Director. The CIT(A) allowed the same but the Tribunal allowed the same to the extent of 50%. The Assessing Officer also disallowed the commission paid to the Managing Director and other executives. However the CIT(A) and the Tribunal allowed the same. The Assessing Officer disallowed amount attributable to personal use of the car but the CIT(A) held that expenditure was not attributable to personal use. - Held that the issues involved are question of fact and are not substantial question of law - The findings of the Tribunal on those issues are not liable to be interfered with

Summary

Issues:
1. Disallowance of foreign tour expenses of the Managing Director's wife
2. Disallowance of commission paid to Managing Director and executives
3. Disallowance of amount attributable to personal use of the car

Analysis:
1. The first issue pertains to the disallowance of foreign tour expenses of the Managing Director's wife. The Assessing Officer disallowed the expenses, but the CIT(A) allowed them, and the Tribunal allowed them to the extent of 50%. The Tribunal considered that the wife had accompanied her husband partly for business and partly for personal purposes. This decision was consistent with precedents from the Kerala and Calcutta High Courts. The Court found this to be a question of fact and not a substantial question of law.

2. The second issue involves the disallowance of commission paid to the Managing Director and other executives. The Assessing Officer disallowed this amount, but both the CIT(A) and the Tribunal allowed it. The Court did not find any reason to interfere with the Tribunal's decision on this issue.

3. The final issue concerns the disallowance of the amount attributable to personal use of the car. The Assessing Officer disallowed this amount, but the CIT(A) held that the expenditure was not attributable to personal use. The Court found this issue to be a question of fact and upheld the decision of the CIT(A) and the Tribunal.

4. Regarding the second issue, the Court noted a conflict in the finding and operative part of the Tribunal's order. The Tribunal had allowed 50% of the expenses of the Managing Director's wife but failed to modify the CIT(A)'s order accordingly. As a result, the Court partly allowed the appeal on this issue, setting aside the part of the Tribunal's order confirming the CIT(A)'s decision.

In conclusion, the Court upheld the decisions of the Tribunal and the CIT(A) on most issues, except for the conflict identified in the second issue, where the Court partly allowed the appeal.