1983 (8) TMI 91 - AT - Income Tax

Summary

Issues:
Interpretation of Rule 6D for deduction of expenses incurred for professional activities during international travel.

Analysis:
The appeal involved an individual, a chartered accountant, claiming deduction for expenses incurred while attending an International Congress of Accountants in Munich. The expenses included airfare, conference fees, and other related costs. The Assessing Officer (AO) disallowed a significant portion of the claimed expenses, invoking Rule 6D of the Income-tax Rules, 1962. The AO restricted the deduction based on the number of days spent abroad for professional purposes compared to the total days spent out of India. The AO allowed only a fraction of the total expenses claimed by the assessee.

The Appellate Assistant Commissioner (AAC) upheld the disallowance but modified the fraction used for calculation, allowing a higher deduction than the AO. The appellant argued that the entire expenses should be allowed as they were incurred wholly and exclusively for professional purposes, satisfying the conditions under section 37(1) of the Income-tax Act, 1961. The appellant contended that even the additional days spent in Europe for professional activities should be considered as part of the professional trip.

The Tribunal analyzed the contentions of both parties and emphasized that the expenses claimed were admissible under section 37(1) as they were incurred wholly and exclusively for professional purposes. The Tribunal cited legal precedents to support the position that Rule 6D should not disallow expenses necessary for conducting professional activities. The Tribunal noted that the appellant had spent the additional days in Europe for professional engagements, as acknowledged by the AO in the assessment order. Therefore, the Tribunal concluded that the entire claimed expenses should be allowed as a deduction while computing the professional income of the assessee.

The Tribunal also referenced a departmental circular from 1950 and a previous tribunal decision to strengthen the case for allowing the full deduction of expenses. Ultimately, the Tribunal found no justification for disallowing any part of the minimum expenditure incurred by the assessee for professional purposes and directed the full deduction of the claimed expenses. As a result, the appeal was allowed in favor of the assessee.