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2003 (1) TMI 92 - HC - Income TaxWhether, on the facts and in the circumstances of the case, the Tribunal was right in holding that foreign tour expenditure of Rs. 47,316 was an allowable deduction? Tribunal has not given any reason whatsoever to come to the conclusion that the fuel injection plant was an extension of the assessees business. As a matter of fact, it is also not clear from the statement of the case as to which part of the surrendered 50 per cent. of the total expenditure, incurred by the assessee, was attributed by it to the fuel injection plant and for studying export potentialities. In the absence of material facts, we are unable to answer the question referred. We feel that under the circumstances the best course would be to remit the matter back to the Tribunal for reconsideration of the entire issue. We order accordingly.
Issues:
1. Allowability of foreign tour expenditure as a deduction under the Income-tax Act, 1961. Analysis: The case involved a question referred by the Income-tax Appellate Tribunal regarding the allowability of foreign tour expenditure of Rs. 47,316 as a deduction. The assessee, engaged in the business of manufacturing fans and sewing machines, had claimed only 50% of the travelling expenses as business expenditure for the assessment year 1974-75. The Income-tax Officer disallowed the remaining 50% of the expenses, considering it capital in nature for setting up a new unit and not allowable as revenue expenditure under section 37 of the Act. The Appellate Assistant Commissioner upheld this decision, leading to an appeal to the Tribunal by the assessee. Upon hearing arguments from both parties, the High Court noted the Tribunal's conclusion that the expenditure was incurred for the extension of the assessee's existing business. However, upon careful examination of the Tribunal's order, the High Court found that the Tribunal did not provide sufficient reasoning for this conclusion. The High Court also highlighted the lack of clarity regarding the allocation of the expenditure between the fuel injection plant and studying export potentialities. Consequently, the High Court decided to remit the matter back to the Tribunal for a reconsideration of the entire issue due to the absence of essential material facts necessary for a definitive answer to the question referred. In conclusion, the High Court disposed of the reference with no order as to costs, emphasizing the need for a more detailed reconsideration by the Tribunal to determine the allowability of the foreign tour expenditure as a deduction under the Income-tax Act, 1961.
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