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TMI Blog2003 (4) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... n with by-pass surgery of the managing director and also the travelling expenses in this connection incurred by the director and managing director's wife were to be treated as business expenses allowable in the hands of the assessee-company?" The assessee claimed the medical and travelling expenses incurred by the assessee-company for providing medical aid to its managing director in the United States of America in a sum of Rs. 5,34,655 as a revenue deduction treating the expenditure as expended solely for business considerations. Likewise the air fare of the managing director's wife and another director, who accompanied the managing director was also claimed as medical expenses of the managing director. The said claim was negatived by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue, Mrs. Pushya Sitaraman, has contended that merely because a resolution has been passed by the board of directors to incur the medical expenses of the managing director, de hors any such contract to that effect, they would not by itself be regarded as an expenditure laid out for business. This court on identical issue in the case of CIT v. Tiam House Service Ltd. [2000] 243 ITR 695 has held in favour of the Revenue, wherein also Steel Ingots Pvt. Ltd.'s case [1996] 220 ITR 552 (MP) on which reliance has been placed by the Tribunal has been considered and this court has held in the said case that there is no reference to the decision of the Constitution Bench of the Supreme Court in the case of Gordon Woodroffe Leather Manufacturi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking into consideration the terms of employment and also taking into account the resolution passed by the board of directors resolving to bear the entire expenditure for the by-pass surgery by the assessee-company and after taking into consideration the test evolved by the Constitution Bench of the Supreme Court in the case of Gordon Woodroffe Leather Manufacturing Co. v. CIT [1962] 44 ITR 551 as to whether the payment was made as a matter of practice, which affected the quantum of salary or there was an expectation by the employee of getting a gratuity or the sum of money was expended on the ground of commercial expediency and in order indirectly to facilitate the carrying on of the business of the assessee, found that there was nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in Sundaram Industries Ltd. v. CIT [1999] 239 ITR 405. The same is the view taken by this court in the case of Ennore Foundries Ltd. v. CIT [2003] 259 ITR 414, wherein also this court held that the reimbursement of medical expenses would constitute benefit or amenity to the director and is required to be taken into account for computing the ceiling limit under section 40(c) of the Income-tax Act, 1961, by referring to the earlier judgment in Sundaram Industries Ltd. v. CIT [1999] 239 ITR 405. The decision relied on by the Tribunal for granting the relief in favour of the assessee on which reliance has been placed by learned counsel for the assessee has been considered by this court in Tiam House's case [2000] 243 ITR 695 and held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground of commercial expediency, in order indirectly to facilitate the carrying on of the business of the assessee. The gratuitous payment like the one made by the assessee cannot be regarded as a matter of commercial expediency as there is nothing on record to show that the managing director would have withheld his services if such payment has not been made and making such payment was necessary or expedient in order to retain his service. We are of the considered view that the reasoning given in CIT v. Tiam House Service Ltd. [2000] 243 ITR 695 (Mad) would apply to this case in all its force and the decision in Steel Ingots' case [1996] 220 ITR 552 (MP) would not further the case on hand. Hence, we are of the view that the finding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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