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TMI Blog1971 (5) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether, on the facts and in the circumstances of the case, the expenditure of Rs. 6,900 incurred by the assessee was incidental to the business carried on by it and allowable ? 2. Whether, on the facts and in the circumstances of the case, disallowance of a sum of Rs. 5,493 out of the assessee's claim of Rs. 10,893 paid as rent for the house, provided rent-free to Shri S. K. Sanghi, director, is justified in law ? " The assessee is a private limited company and the assessment year is 1962-63, the relevant accounting period being the year ended 30th September, 1961. The facts are simple and there is no doubt about them. Moti Lal Sanghi, a former chairman of the assessee-company, died in July, 1961, and his dead body was taken to Jodh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case, the sum of Rs. 5,493 out of Rs. 10,893 paid as house allowance to Shri S. K. Sanghi, Director, in accordance with the terms and conditions of his contract of service with the company, was rightly disallowed ? The Tribunal, however, held that out of the three questions formulated by the assessee it was question No. 2 which could actually be referred to the court. The question was however recast and as a result both the questions are now before us. The assessee has not placed on record any rules. or bye-laws of the company nor has our attention been invited to any regulation in the articles of association providing for payment of any charges to the chairman of the company for arriving at Delhi in connection with the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Assistant Commissioner, the carrying of his body to his native place was the responsibility of his relatives and that the only reason for debiting these expenses to the travelling expense account of the company was that the other directors were the brothers, son and nephew of the deceased. We do not think this is a correct approach to the problem. It was held by the Supreme Court in Commissioner of Income-tax v. Malayalam Plantations Ltd. that the expression " for the purpose of the business " as used in section 10(2)(xv) of the Income-tax Act, 1922, which is analogous to section 37 of the new Act is wider in scope than the expression " for the purpose of earning profits ". Various illustrations have been given in that judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd exclusively laid out for the purpose of the business, reasonableness of the expenditure, was held to be adjudged from the point of view of the businessman and not of the revenue. The deceased had come to Delhi for the business of the company. When he would have gone back from Delhi to Jodhpur it would be again on the business of the company for it was the liability of the company to meet his travelling expenses and to take him back to Jodhpur. In either event the visit of the deceased to Delhi and his return journey to Jodhpur would have been for the purposes of the business of the assessee. The expenditure incurred by the assessee would have been for the carrying on of the business. It was argued on behalf of the revenue that the mome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnished residence and conveyance. He took up a house in Delhi for which he was paid by the assessee-company a sum of Rs. 900 per mensem by way of rent. In the assessment year 1961-62 the Tribunal held that the allowance of Rs. 900 per mensem was rather excessive and that on an estimate a sum of Rs. 450 per mensem was considered reasonable. In connection with the assessment year 1962-63 with which we are concerned in this case the Tribunal relied upon its previous order, followed the same decision and thus disallowed the balance of Rs. 5,493. The argument advanced by the learned counsel for the assessee is that it was not open to the Tribunal to use its own ipse dixit. If the director himself had been paying rent at the rate of Rs. 900 p. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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