1986 (4) TMI 94 - AT - Income Tax

Summary

Issues Involved:
The judgment involves the admissibility of deduction for foreign travel expenses incurred by the wife of a senior partner of a Chartered Accountants firm and the claim for weighted deduction under section 35B on the same expenses.

Admissibility of Deduction for Foreign Travel Expenses:
The respondent firm, a reputed Chartered Accountants firm, associated with an internationally renowned accounting firm, incurred expenses for the senior partner and his wife to attend a meeting in the UK. The Income Tax Officer disallowed the deduction for the wife's travel expenses, stating lack of business connection. However, the CIT(A) allowed the deduction, emphasizing the advantage of wives' presence in business conferences for establishing social contracts. The firm argued that such trips were customary, enhancing professional relationships and leading to increased work opportunities. The Tribunal upheld the CIT(A)'s decision, considering the expenses as incurred for commercial expediency and indirectly facilitating the business, given the firm's substantial income and international association.

Claim for Weighted Deduction under Section 35B:
The respondent firm claimed a weighted deduction under section 35B for the same foreign travel expenses. The Departmental Representative did not challenge this claim, and the CIT(A)'s decision to allow the deduction was confirmed by the Tribunal. The Tribunal found the expenses to be necessitated by commercial expediency, leading to the confirmation of the CIT(A)'s order on this point.

Conclusion:
The Tribunal dismissed the Department's appeal, upholding the admissibility of the deduction for foreign travel expenses incurred by the wife of the senior partner and confirming the claim for weighted deduction under section 35B on the same expenses.