TMI Blog2002 (3) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.92,219 made under rule 6D of the Income-tax Rules read with section 37(3) of the Income-tax Act, 1961?" The sixth question as reframed and referred to us by the Tribunal is as follows: "Whether, on the facts and in the circumstances of the case, and having regard to the Modvat scheme of excise duty, the Tribunal was right in law in deleting the addition by the Assessing Officer to the value of the closing stock?" The problem with regard to the first question arises as follows. Claim for allowance was made by the assessee in respect of travel undertaken by its employees outside the headquarters. The assessee's case was that as per sub rule (2) of rule 6D of the Income-tax Rules, such travelling expenditure including hotel expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tood at the material time is quoted below: "(2) The allowance in respect of expenditure incurred by an assessee in connection with travelling by an employee or any other person within India outside the headquarters of such employee or other person for the purposes of the business or profession of the assessee shall not exceed the aggregate of the amounts computed as hereunder: (a) in respect of travel by rail, road, waterway or air, the expenditure actually incurred; (b) in respect of any other expenditure (including hotel expenses or allowances paid) in connection with such travel, an amount calculated at the following rates for the period spent outside such headquarters; ------------------------------------------------------------ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the expenditure incurred by each employee for the whole year as claimed by the assessee. In this view of the matter, the third question is answered in the negative, i.e., in favour of the Revenue and against the assessee." The next case is a decision of the Madras High Court reported in the case of CIT v. Ashok Leyland Ltd. [2002] 253 ITR 425. In this case, their Lordships said as follows: "The intent of the rule clearly is that the computation required to be made under the rule is to be made separately for each travel undertaken by the employee and the amount that can be claimed as deduction for the year is the aggregate of the amounts so calculated separately for each travel undertaken by the employee." After hearing Dr. Pal, ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that this is not the true construction of the said rule. The words "aggregate of the amounts" mentioned in the said sub-rule refers to the aggregate for the assessment year. Such aggregate is to be found out from the number of days, the maximum expense permitted per day and the number of employees involved. On the basis of actuals this aggregate amount, even if exceeded, is the ceiling limit of allowance permissible, but within such aggregate amount it little matters what one particular employee spent on one day of travel and what he (the same employee) spent on another. If it were the intention of the rule-making authority to limit the allowable expense per day per employee, or per trip per employee, and not merely to limit the allowabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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