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TMI Blog1997 (3) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... he managing partner Sri P. Raichowdhury is said to be the founder and the live-wire of the business. During the accounting year relevant to the assessment year 1991-92, assessee-firm claimed deduction of a sum of Rs. 30,438 referable to the medical expenses incurred in connection with treatment of the managing partner. The aforesaid expenditure was incurred for purchase of Pace Maker. Assessing Officer was of the opinion that the expenditure is exclusively personal in nature and not related to the business. He thus disallowed the claim. 3. Aggrieved, assessee contended before the first appellate authority that there is no bar in allowing such expenditure either under section 40(b) or under section 37 of the Act. He further submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) R.A. Goodsir & Co. v. CEPT [1938] 16 ITR 367 (Mad.). Explaining further he contended that the expenditure on medical treatment of the managing partner was necessary in the interests of business as he was the live-wire of the business and hence the expenditure can be said to be wholly and exclusively spent for the purpose of business of the assessee-firm and allowable u/s. 37 of the Act. Ld. counsel supplied figures of total income in respect of the subsequent assessment years to show that the turnover and the profit increased from year to year due to the efforts of the managing partner, who is well-conversant in the business. 5. On the other hand, ld. departmental representative submitted that the expenditure is primarily a personal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e partner and their Lordships held that it is hit by section 10(4)(b) of the IIT Act, 1922. In our opinion, this case also does not directly apply to the facts of the instant case. No doubt, certain observations of the Court in the aforesaid two cases were pointed out by the ld. counsel to show that payment made to the partner, for letting out the immovable property owned by him in individual capacity, is not hit by the provisions of section 10(4) of the old Act, section 40(b) of the 1961 Act, but as could be seen from the assessment order, in the instant case, the tax authorities have not invoked the provisions of section 40(b). Thus, the argument advanced by the ld. counsel for the assessee that the payment made by the firm for purchase o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condary. The Bench further held that such expenditure could not be said to be incurred wholly and exclusively for the purpose of profession. Similar view was taken by the Bombay Bench of the Tribunal in the case reported in Dhimant Thakkar v. Fifth ITO [1994] 51 ITD 578 wherein it was observed that if the expenditure can be attributed to both the purposes, i.e., professional as well as personal, then it cannot be allowed under section 37. It was further observed therein that expenditure on medical treatment of eyes had an element of personal expenditure and hence could not be allowed as business expenditure under section 37(1) of the Act. In our opinion, the aforesaid two decisions of the Tribunal directly cover the issue. It may not be out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee contended that in the present day of socio business environment, membership in the club is necessary and it is allowable as expenditure incurred wholly and exclusively for the purpose of business. Ld. counsel relied on the decision of the Hon'ble Gujarat High Court in the case of Gujarat State Export Corpn. Ltd. v. CIT [1994] 209 ITR 649. On the other hand, ld. Departmental representative supported the order of the Commissioner (Appeals). 8. On a careful consideration of the rival submissions and on perusal of the case law cited by the ld. counsel for the assessee, we are of the opinion that the assessee is entitled to claim deduction of a sum of Rs. 2,358, inasmuch as, the payment of subscription to the Rotary Club is revenue expen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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