TMI Blog2015 (10) TMI 2381X X X X Extracts X X X X X X X X Extracts X X X X ..... 487 of 1997 - - - Dated:- 28-10-2015 - M. S. Sanklecha And G. S. Kulkarni, JJ. For the Petitioner : Mr. Nitesh Joshi with Mr. Bharat Damodar i/b Kanga Co., Advocates For the Respondent : Mr. Suresh Kumar Advocate JUDGMENT ( Per G. S. Kulkarni, J ) 1. By this reference under section 256 (1) of the Income Tax Act, 1961 (the Act),the Income Tax Appellate Tribunal (Tribunal) has referred the following question of law for answer the opinion of this Court : Whether on the facts and in the circumstances of the case, the tribunal was right in law in holding that the expenditure of ₹ 43,600/on medical treatment of eyes for improving the vision has an element of personal expenditure, and accordingly the expenditure incurred by the appellant on foreign tour for pre-operation investigation relating to his eyes cannot be allowed as business expenditure u/s 37 (1) In nutshell the facts are : 2. The applicant assessee is a Solicitor by profession. During the assessment year 198687, the applicant incurred an expenditure of ₹ 43,600/on a foreign tour in connection with a pre-operation investigation of his eyes while determining his total income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference of the above question of law. On a reference accordingly, made by the Tribunal, the above question of law has fell for our opinion. 6. Mr.Joshi learned Counsel for the applicant would submit that for the subject assessment year, the assessee who is a Solicitor by profession had visited the U.S.A. for pre-operation investigation of his eyes and had incurred an expenditure of ₹ 43,600/. This expenditure was necessarily an expenditure relating to the assessee s profession. It is urged that but for this treatment the assessee would not have been able to continue with his profession and therefore the expenditure ought to have been allowed as a deduction. He submits that eyes have a direct nexus with the professional activity of the applicant and therefore, it is not a personal expenditure as held by Tribunal. It is submitted that medical treatment for eyes is so very important from the point of view of the profession of the assessee and as such has a direct relation to the profession of the assessee. If the medical treatment was not to be undertaken, then the assessee would not have been in a position to practice his profession. It is submitted that Section 37 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and scope of Section 37 of the Act. Mr.Suresh Kumar submits that this expenditure as claimed by the applicant has been rightly held as a personal expenditure. 9. To appreciate the contentions as raised on behalf of the parties, it would be useful to reproduce the relevant portion of Section 37 which arises for consideration and reads as under: General 37. Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head Profits and gains of business or profession. 10. It is apparent that Section 37 of the Act is a residuary provision. From the wordings of Section 37(1) of the Act, it can be clearly gathered that in order to be eligible for deduction under this provision following conditions were required to be satisfied: (1) The expenditure must not be of the nature described in Sections 30 to 60; (2) The expenditure must have been laid down wholly and exclusively for the purpose of business / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resist but point out that in this Court itself, we have a couple of visually challenged Advocates who are very competent in discharging their duties. We may also make reference to the late Mr. Sadhan Gupta who passed away recently and though visually challenged was as such appointed as Additional Advocate General of West Bengal in 1978 and the Advocate General in 1986. Besides, we cannot but agree with the observation of the CIT(A) in his order dated 12th October, 1988 that if the submission of the applicant is taken to its logical conclusion, then every and all expense incurred on daily living and food would be allowable as expenditure under Section 37 of the Act. Thus, we find no substance in the contention that it is not a personal expenditure incurred by the Appellant. 13. It was also submitted by the Applicant that the expenses on account of investigation and treatment of eyes be allowed under Section 37(i) of the Act on the principle of commercial expediency. In support, reliance was placed upon the decision of this Court in Mehboob Production (P) Ltd. (supra), Sakal Papers (P) Ltd. (supra) and of M. P. High Court in Steel Ingots (P) Ltd. (supra). All the above decisions w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no dispute with the above proposition. However, in this case, it is an expenditure which is personal in nature as held by us and the benefit of such expenditure in the profession or business is only consequential to the personal expenses. If at all the expenses in this case is personal and the incidental benefit, if any, is to carrying on of profession. Therefore, it is not an expenditure which can be said to be incurred wholly or exclusively for the purposes of business. 16. It was next submitted by Mr. Joshi that the impugned order of the Tribunal observes that the expenditure incurred for improving the vision of the eyes may have some nexus to the professional activity. In view of the above, it is submitted that some part of the expenditure has to be allowed as being incurred for professional or business purposes. The words used in Section 37(1) of the Act is wholly and exclusively for the purposes of business. In this case, the finding of fact is that it is incurred for the personal purposes. Be that as it may, the words used are wholly and exclusively for the purposes of business or profession . In normal understanding the word wholly would mean entirely and the word ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion for the purpose of earning profits Its range is wide: It may take in not only the day to day running of a business but also the rationalization of its administration and modernization of its machinery it may include measure for the preservation of the business and for the protection of its assets and property from expropriation, coercive, process or assertion of hostile titles, it may also comprehend payment of statutory dues and taxes imposed as a pre-condition to commence or for carrying on of a business, it may comprehend many other acts incidental to the carrying on of a business. However wide the meaning of the expression may be, its limits are implicit in it. The purpose shall be for the purpose of the business that is to say, the expenditure incurred shall be for carrying on of the business and the assessee shall incur it in his capacity as a person carrying on the business. (Emphasis supplied) The above observation of the Supreme Court completely militates against the submissions as made on behalf of the Applicant. 17. It is thus clear that the requirement to claim a deduction under Section 37 which is a residuary provision is quite clear, which is t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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