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TMI Blog1985 (2) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,500 for the ticket as well as further stay. It is claimed that he has joined the tour for the future expansion of business and for taking further knowledge in respect of the business and hence the expenditure should be allowed as business expenditure. However the same is not allowable as business expenditure of the firm for the following reasons. (1) The sales of the firm regarding its product is restricted to only local sales within India and the assessee has never any time exported its product outside India much less to the U. S. A. and hence question of advance on further prospect of business does not arise. (2) Certificate dt. 18th Nov., 1981 given by the Chamber of Commerce also does not help the claim of the assessee firm as it simply mentions that Shri Pramodbhai has joined the tour of USA sponsored by the Chamber. Nowhere it is mentioned that it was a business tour. Such tours are generally pleasure and sight seeing tours organised by such body. Hence expenditure incurred on the foreign tour of Rs. 18,500 is disallowed." 2.1. On appeal, the matter was decided exparte on merits. While dismissing the appeal the Commissioner (A) held as under: "I fail to appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of facts filed before the Commissioner(A) particular attention was drawn to the Board's Circular dt. 19th Jun., 1950 laying down that the question of admissibility of expenditure on visits to foreign countries should not be judged from the point of view as to whether such visits result immediately in the earning of profits and Board further directed that the expenditure should be allowed in toto if it is established that the expenditure is of Revenue nature and ITO should not be too meticulous Report dt. 2nd March, 1984 of activities of the Chamber during the study tour of USA was complied in the paper book in support of the contention that it was a business tour and how the various traders were affected by the visit. On a query from the Bench as to whether the said report was with the Commissioner (A), the answer was in negative. 4. The ld. Departmental Representative relied upon the order of the CIT (A). 5.1. We have considered the submissions and have gone through very carefully the orders of the authorities below. In our opinion, the assessee should succeed in part Our reasons are as follows: 5.2. It is an admitted fact that the assessee has claimed the deduction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the tour and not paying any attention to the claim in respect of an expenditure which was mainly on air-ticket. Persons in the business would not by nature remain confined only to the activity of existing trade on hand but would always have an eye to take up more and more commodities on the list of their regular trade Besides, rationalisation of administration and organisation would always be the constant goal of a businessman. this instinct and desire emanate from in built entrepreneurship of the persons engaged in the trade. 5.4. This would bring in the aspect of consideration of exploratory business tours which would govern the claims under s. 37(1). Under that section the expenditure can be denied of allowability only if the expenditure is personal expenditure of the assessee is of capital nature or not laid out wholly and exclusively for the purposes of the business or falling as the expenditure of a nature prohibited by other specific provisions of the Act. The authorities below have proceeded on the footing that the expenditure incurred is in nature of personal expenses of the assessee. Now in this case, the assessee is a partnership firm. Naturally then there canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t result in concrete shape of physical expansion of business. Suffice it to say that visits to industrially advanced nations with the object of furtherance of trade would endure as benefit to the business of the firm. 5.7. While we are on the aspect of personal expenditure one shall have to consider also what is included in the personal expenditure According to the decision in the case State of Mdras vs. G. J. Coelhe (1964) 53 ITR 186 (SC) and in Gopaladas Dhayabhai Lavsi vs. CIT (1977) 108 ITR 531 (Guj) person expenses include only expenses on the person of the assessee or to satisfy needs such as clothes, food, etc., or for purposes not related to business for which the deduction is claimed Therefore, the only ground on which the disallowance can be sustained can be expenditure not related to the business. But on this aspect we have already dealt with how the expenditure can be said to be related to the business. It may sometimes happen that assessee has not brought enough material in support but that may be because of ignorance about the degree of nexus required to satisfy the taxing authority, It may happen that according to the assessee the explanation given could be adequa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with at present. 5.9. While evaluating the claim of the assessee on such type of expenditure the approach of the Revenue authorities shall have to be based on management principle which involves significantly an element of discretion so as to test the claim on the basis of changing policies of the Government and economic environment. It should be common knowledge that government has been bringing out various schemes and incentives for the purpose of earning more an more foreign exchange so as to meet various requirements, same being very vital, for the healthy subsistence of economy. For this purpose even the exchange policy has been taking a liberal view on the aspect of trade tours and trade fairs. Various organised agencies are being asked by the Government authorities to organise various business tours so as to promote exports of the Indian goods and also bring in the knowledge and technical know how of the latest scientific innovations for the purpose of advancing the industrial development on the basis of latest technology and certainly this cannot be ensured without the foreign tours being organised by various Chambers and Trade Organisations. The importance and anxiety ..... X X X X Extracts X X X X X X X X Extracts X X X X
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