1979 (1) TMI 124 - AT - Income Tax

Summary

Issues:
1. Deduction of foreign travel expenses for directors/employees.
2. Weighted deduction under section 35B of the Act.
3. Deduction of salary paid to an executive employee.
4. Deduction claimed under section 80G of the Act.

Analysis:
1. The first issue revolves around the deduction of foreign travel expenses incurred by the assessee on directors and employees. The Income Tax Officer (ITO) disallowed the deduction, stating that the travel was unnecessary and could have been done through correspondence. However, the Appellate Tribunal found merit in the assessee's submissions, especially considering past Tribunal orders allowing similar deductions. The Tribunal directed the ITO to modify the assessment and accept the deductions for the relevant years.

2. The second issue concerns weighted deduction under section 35B of the Act for foreign travel expenditure on directors and an executive employee. The Tribunal accepted the claim for weighted deduction on the directors' expenses based on previous Tribunal decisions. However, the claim for the executive employee was rejected due to lack of evidence connecting the travel to business activities. The Tribunal directed the ITO to grant weighted deduction for the directors' expenses but rejected it for the executive employee.

3. The third issue involves the deduction of salary paid to an executive employee. The Tribunal upheld the disallowance of the deduction as the assessee failed to provide evidence of the services rendered by the employee to the company. Despite the claim that the employee acted as an executive PRO, the absence of supporting evidence led to the Tribunal affirming the decision of the Appellate Authority Commissioner (AAC).

4. The final issue pertains to the deduction claimed under section 80G of the Act for one of the assessment years. The representative for the assessee did not press this ground for the relevant year, leading to its rejection by the Tribunal. Consequently, the appeal for the assessment year was partly allowed, while the appeal for the other assessment year was fully allowed based on the Tribunal's findings on the various issues discussed.