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TMI Blog1996 (1) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... t the expenditure incurred on the foreign tour of the director and his wife in connection with the medical treatment of the director, was business expenditure of the assessee and allowable as a deduction under the Income-tax Act, 1961 ? " The facts of the case lie in a narrow compass. The non-applicant assessee, Steel Ingots Private Ltd., Indore, is a private limited company deriving income from manufacture and, sale of steel ingots from waste iron material and scrap. For the assessment year 1981-82, it claimed total foreign travel expenses to the tune of Rs. 1,68,125. These foreign tour expenses were incurred by the assessee-company on the foreign travel of the directors Shri K. S. Trivedi, Shri P. P. Gupta, Airen and the wives of Shri T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the journey of his wife accompanying him to attend on him was in the best interest of the assessee's business and was thus wholly and exclusively essential for the purposes of the business of the assessee-company. The Tribunal, therefore, directed the Inspecting Assistant Commissioner (Assessment) that out of the total amount of Rs. 1,68,125 disallowed by him, the total expenditure incurred on travel and medical treatment of Mr. Agrawal and on travel of Mrs. Agrawal along with him alone, should be allowed as a deduction. The order of the Tribunal passed on November 30, 1984, is annexure "C". Aggrieved by the order of the Tribunal, the Commissioner of Income-tax, Bhopal, filed an application under section 256(1) of the Income-tax Act, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the non-applicant, supported the view taken by the Tribunal. On a perusal of the record, it is found that the board of directors of the assessee-company passed a resolution on April 12, 1980, authorising foreign tour and medical expenses on Mr. Agrawal for his treatment in U. S. A. as well as Mrs. Agrawal to accompany him on the ground that as Shri Agrawal was the financial director of the company, his services were absolutely necessary for the purposes of the assessee's business. Since Mr. Agrawal was suffering from heart trouble, he could not go by himself and, therefore, his wife had to accompany him and for this purpose, foreign exchange was sanctioned by the Reserve Bank of India for both Mr. and Mrs. Agrawal. A copy of the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid directors and their wives and restricted the claim only to the tour expenses concerning Shri R. R. Agrawal and his wife. We noticed that there was necessity of medical treatment of Shri R. R. Agrawal in the U. S. A. Such advice was tendered by eminent doctors like Dr. K. G. Nair, heart specialist of Bombay, and Dr. R. S. Mehta, a renowned physician and cardiologist. Shri Agrawal has proceeded to U. S. A. for a by-pass heart surgery. The assessee-company failed to say that the services of Shri Agrawal, acting as a financial director, were absolutely necessary for the purposes of the assessee's business, as such passed the resolution. Section 37 of the Income-tax Act provides that any expenditure (not being expenditure of the nat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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