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TMI Blog1990 (10) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... aking this disallowance. On appeal, the Commissioner of Income-tax (Appeals) deleted both the disallowances. On further appeal, the Tribunal held the deletion of the disallowance of Rs. 5,985 on account of travelling expenses on the ground that rule 6D read with section 37(3) seeks to limit the expenditure incurred on travelling to the extent of stay in hotels confining it to daily allowance referred to in rule 6D and do not extend to any other expenditure incurred provided that expenditure was for the purpose of business. On these facts, the following question of law has been referred to this court : "Whether, on a correct interpretation of rule 6D(2)(b) of the Income-tax Rules, 1962, the Tribunal was justified in restricting the disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces paid) in connection with such travel, an amount calculated at the following rates for the period spent outside such headquarters : (i) in respect of an employee whose salary Rs. 100 per day or part thereof ; is Rs. 1,000 per month or more (ii) in respect of any other employee Rs. 50 per day or part thereof (iii) in respect of any other person an amount calculated at the rates applicable in the case of the highest paid employee of the assessee: Provided that, if the stay of such employee or other person outside his headquarters is at Bombay, Calcutta or Delhi, the amount computed at the aforesaid rates shall be increased by a sum equal to fifty per cent. of such amount Provided further that in a case where such employee or other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y station, as the case may be, at the hotel but after arriving at the hotel he may have to engage a taxi or to incur expenditure in connection with the business. If a person, instead of availing himself of an aeroplane or train, engages a car to go out of the headquarters and stay in a hotel, his entire expenditure on travelling from the place of his departure to the hotel at the destination would normally be allowed as an expenditure. On a parity of reasoning, any expenditure for engaging a taxi or a conveyance from the airport or the railway station, as the case may be, to the hotel has to be excluded from the purview of rule 6D. It is true that the object of enactment of section 37(3) and rule 6D is to curtail or reject claims for deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inus cannot be brought within the purview of rule 6D. The Revenue has misconstrued the rules. The expenditure for travel is governed by clause (a) and not clause (b) of sub-rule (2) of rule 6D. Clause (b) deals with expenditure other than for travelling. Under clause (a), it is the actual expenditure which is admissible, be it by rail, road, air or waterways. But the cost of the entire journey from the start to the place where the traveller is to put up would also form part of his travel referred to in clause (a). Clause (a) does not predicate that the travel cannot be composite travel by railways, roadways, waterways and airways. Every travel in one sense is of mixed nature ; where a person boards a plane or a train or a ship, steamer, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he restriction thus confines itself only to the expenses on stay and does not cover other expenses incurred provided they are not personal and are exclusively for the purpose of the business. It is not necessary for us to illustrate the types of expenditure but suffice it to say that rule 6D read with section 37(3) seeks to limit the expenditure incurred on travelling to the extent of stay in hotels confining it to daily allowances referred to in rule 6D and do not extend to any other expenditure incurred provided the expenditure is wholly and exclusively laid out for the purpose of business. For the reasons aforesaid, we answer the question in this reference in the affirmative, in favour of the assessee and against the Revenue. There wil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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