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TMI Blog2002 (9) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... er, on the facts and circumstances of the case, the Tribunal was justified in holding that the expenditure on the air travel of the assessee's wife was not incurred wholly and exclusively for the purpose of the business of the assessee and that the benefit derived by the wife would detract from the exclusiveness of the outlay, so as to render it ineligible as a deductible expenditure?" The assessee is an individual and he is a clearing and forwarding agent for U.S.S.R. lines of vessels. The assessee filed his return of income for the assessment year 1983-84 with the relevant previous year ending March 31, 1983, and claimed deduction of a sum of Rs. 51,994 which represented the foreign travel expenses incurred for the assessee's wife who accompanied the assessee in his foreign trips to Singapore, Tokyo, Hong Kong, etc. The Income-tax Officer, while completing the assessment, disallowed the assessee's wife's foreign tour expenses for the reasons stated in the earlier assessment orders. On appeal, the Commissioner of Income-tax (Appeals), following its earlier orders, held that the assessee's wife had accompanied the assessee in his foreign tours and the assessee was a cardiac pat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in CIT v. Aspinwall and Co. Ltd. [1999] 235 ITR 106 and CIT v. Appollo Tyres Ltd. [1999] 237 ITR 706 wherein the High Courts have held that the travel expenses incurred by the wife on her foreign trips would be allowable as a business expenditure. Learned counsel in his fairness also brought to the attention of this court the decision of the Kerala High Court in Rain Bahadur Thakur Ltd. v. CIT [2002] 257 ITR 289 where the Kerala High Court distinguished its earlier decisions in Aspinwall and Co. Ltd.'s case [1999] 235 ITR 106 and Appollo Tyres Ltd.'s case [1999] 237 ITR 706 referred to above and held that the expenditure incurred on the foreign tour by the assessee's wife was not an allowable expenditure. Mr. T. C. A. Ramanujam, learned counsel for the Revenue, on the other hand, submitted that the ratio of the decision of this court in T. S. Hajee Moosa and Co.'s case [1985] 153 ITR 422 would squarely apply to the facts of the case. We have carefully considered the submissions of learned counsel for the assessee and learned counsel for the Revenue. This court in T. S. Hajee Moosa and Co.'s case [1985] 153 ITR 422 has upheld the disallowance of expenditure on two grounds; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee, and (ii) for the purpose of business, and therefore the expenditure was not incurred wholly and exclusively for the purpose of the business and it would not qualify for allowance. In other words, the court held that the expenditure was for a dual purpose and it would not qualify for allowance. This court after noticing some earlier cases on this aspect held as under : ". . . the object of the partner of the assessee at the time when he took his wife along with him on his foreign tour was only to serve or assist him and not for any business purposes, albeit there was also another object, namely, the furtherance or the promotion of the business of the assessee by the partner taking his wife along with him. Even in such a case, it would only be a dual purpose in respect of which the expenditure had been incurred. On a consideration of the principles laid down in the aforesaid decisions, it is difficult to support the conclusion that the expenditure in question was wholly and exclusively laid out for business purposes." In our view, the decision of this court in T. S. Hajee Moosa and Co.'s case [1985] 153 ITR 422 would squarely apply to the facts of the case. As fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show that the travel was not for the business purposes and, hence, it was for business purposes and the order of the Tribunal allowing the expenditure was upheld. Both the decisions were distinguished by the Kerala High Court in a subsequent decision in Ram Bahadur Thakur Ltd. v. CIT [2002] 257 ITR 289 on the ground that the findings in both the decisions were rendered on the basis of facts of each case. The Kerala High Court held that the question whether the expenditure is allowable or not would depend upon the facts of each case. It held that only after satisfying the condition that the travel was undertaken not for personal purpose, but wholly and exclusively for the purpose of the business, the amount would be allowable. The Kerala High Court held that that it would not endorse the view taken in the earlier case that whenever the wife of a director undertook a foreign tour along with the director, it should be presumed that the expenditure on the wife of the director was incurred wholly and exclusively for the purpose of the business. The Gauhati High Court in CIT v. George Williamson (Assam) Ltd. [1998] 234 ITR 130 held that the expenditure was allowable. The Gauhati Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the taxpayer's object in making the journey. The question will be answered by considering whether, the stay in the South of France was a reason, however subordinate, for undertaking the journey, or was not a reason but only the effect. If a week's stay on the Riviera was not an object of the consultant, if the consultant's only object was to attend on his patient, his stay on the Riviera was an unavoidable effect of the expenditure on the journey and the expenditure lies outside the prohibition in section 130." The above speech was considered by the House of Lords in McKnight v. Sheppard [1999] 239 ITR 887 ; [1999] 3 All ER 491 ; [1999] 1 WLR 1333 and the House of Lords held as under : "If Lord Brightman's consultant had said that he had given no thought at all to the pleasures of sitting on the terrace with his friend and a bottle of Cotes de Provence, his evidence might well not have been credited. But that would not be inconsistent with a finding that the only object of the journey was to attend upon his patient and that personal pleasures, however welcome, were only the effects of a journey made for an exclusively professional purpose. This is the distinction which the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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