TMI Blog1985 (3) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, stated that it became necessary for his wife to accompany him for the purpose of attending on him. Though supporting medical certificates were also produced before the ITO, he disallowed the assessee's claim to the extent of Rs. 20,534 representing the amounts spent towards the air ticket of the partner's wife (Rs. 12,258), expenses attributed to her (Rs. 7,276) and the estimated personal expenses of the partner (Rs. 1,000). On appeal by the assessee, the AAC found, relying upon the correspondence between the assessee and the Reserve Bank of India relating to the release of foreign exchange as well as the medical certificates and recognising what was styled as modern trend in commercial and business organisations requiring the wives of the top executives to accompany their husbands on foreign trips, that the expenses incurred in connection with the trip of the wife of the partner of the assessee were wholly and exclusively incurred for business purposes. In addition, the AAC also found that the wife of the partner of the assessee was trained in modern designs, which helped the growth of the business of the assessee and that considering the export sales of the assessee, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign tour of the wife of the senior partner of the assessee, would partake the character of personal expenses and do not qualify for allowance under s. 37(1) of the Act. Referring to the medical certificates, the learned counsel for the Revenue pointed out that they at best indicated that the partner of the assessee was in need of attention owing to his being afflicted by diabetes, but that would not render the expenses incurred in that connection any the less personal. Strong reliance in this connection was placed by the learned counsel for the Revenue upon the decision of the Supreme Court in State of Madras v. Coelho [1964] 53 ITR 186, and that of the Gujarat High Court in Bombay Mineral Supply Co. Private Ltd. v. CIT (judgment in Income-tax Reference No. 56 of 1974, dated October 9, 1975 [1985] 153 ITR 437. On the other hand, the learned counsel for the assessee submitted that the expenses incurred on the wife, who accompanied her husband, the partner, on his foreign tour cannot be characterised as personal, as the expenditure had been incurred for her, while the partner on tour, was on a business tour. It was also submitted that though such expenses might appear at first b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an attendant has arisen on account of the state of health of Ahmed Hajee Mohamed. He has all our sympathy. May be that Ahmed Hajee Mohamed is a diabetic and a good businessman, but diabetes is personal to him and has nothing to do with business. It is not diabetes that has made him a good businessman. The state of health of a person is not in any way related to the business activities carried on by him. A good businessman may be bad in health and a good and healthy person may be no good at all in business. Therefore, the state of health has no relevance or bearing at all to the business activities carried on by a person. If businessman, not in good health, desires to secure the help and assistance of an attendant, then, it is purely to satisfy his personal need. Such need is not very different from say, his need for food and clothing, except that this need is directed towards the maintenance of his health. The expenses incurred for availing of the services of an attendant would, in our view, be only to satisfy or meet the personal need and in that context, it is really immaterial whether the person concerned avails himself of the services of his wife or that of a stranger. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as argued that the payment of interest made by the assessee was a personal expense. Repelling that argument, the Supreme Court pointed out that personal expenses would include expenses on the person of the assessee or to satisfy his personal needs, such as clothing, food, etc., or for purposes not related to the business for which the deduction is claimed. Earlier, as we have pointed out, the expenditure in this case was incurred in order to satisfy and fulfil the personal need of the partner who had undertaken the foreign tour with a view to control his diabetes and maintain good health as a living human being and that was not in any manner related to the business in respect of which the deduction had been claimed. Almost in similar circumstances, the Gujarat High Court in Bombay Mineral Supply Co. Private Ltd. v. CIT (judgment in Income-tax Reference No. 56 of 1974 dated October 9, 1975-[1985] 153 ITR 437), had occasion to consider this question, though with reference to a private limited company, the assessee in that case. The managing director had undertaken a business tour of Japan and as he was in indifferent health, his wife accompanied him to look after him. One half of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal need of the partner to have his wife with him to attend on him and no more and by no stretch of imagination, the expenditure incurred in that connection can be said to relate to business. We are, therefore, of the view that the expenditure incurred was in the nature of personal expenses only. The learned counsel for the Revenue next submitted that even assuming that the expenditure incurred related to business purposes, such expenditure was not laid out or expended wholly and exclusively for the purpose of the business. In other words, the argument is that the expenditure was laid out for a dual purpose, namely, to satisfy the personal needs as well as for purposes of business and not solely and exclusively for business purposes and that would take it out of s. 37(1) of the Act. However, the learned counsel for the assessee maintains reiterating the second aspect of his first contention that the predominant or the main purpose of the expenditure was for purposes of business and in that sense, the expenditure had been wholly and exclusively laid out for business purposes and not personal and, therefore, the Tribunal was right in the view it took. Reliance, in this connection, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or allowance under s. 37(1) of the Act. Viewed thus, the expenditure in this, case had a twin purpose and did not qualify for allowance. We are supported in the above view of ours by the several decisions to which our attention was drawn. Norman v. Golder (Inspector of Taxes) [1944] 26 TC 293; [1945] 13 ITR (Suppl) 21 (CA), is one such decision. There, while working as a professional shorthand writer in the Royal Courts of justice, owing to the condition of courts, Norman contracted an illness, which necessitated medical care and his absence from work. A claim was made that the expenses incurred were permissible deductions under rule 3 of the Rules applicable to Cases I and II of Schedule D prohibiting disbursements or expenses not being money wholly and exclusively laid out or expended for the purposes of the trade, profession, employment or vocation. Rejecting the claim, Lord Greene M.R. pointed out that it is true that if a person does not get well by incurring expenses by way of doctor's bills, etc., he cannot carry on trade or profession and if he cannot carry on trade or profession, he cannot earn and if he cannot earn, income, the Revenue will not get any tax, but the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd merited disallowance in full. The General Commissioners, however, upheld the claim made by the trade mark agent, but Plowman J. disagreed with that and found that the object of going into the nursing home was to receive treatment for the illness and it would be opposed to common sense to say that his motive Sunderlal v. CIT [1951] 19 ITR 324 (All), dealt with the allowability of an expenditure of Rs. 500 spent on boarding and lodging of partners in the course of their tours undertaken by them for business purposes under s. 10(2)(xii) of the Indian I.T. Act, 1922. It was pointed out that boarding and lodging expenses of a partner cannot be said to be wholly and exclusively for the purpose of such business, for, such expenditure had to be incurred, though it may be that a partner going on tours may have to spend more on his boarding; but he may have to spend something even if he had remained at the headquarters and such an expenditure had to be incurred at least for preservation of life and, therefore, the money cannot be said to have been wholly and exclusively laid out or expended for business purposes. Prince v. Mapp (Inspector of Taxes) [1970] 1 WLR 260; [1971] 79 ITR 671 (Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the company was personal to the auditors and did not have the effect of affecting the company's interest in any manner and the expenditure cannot be considered to have been incurred by the company in connection with the carrying on of its business and cannot, therefore, be considered as having been laid out or expended wholly and exclusively for business purposes of the company. This decision does not throw any light upon the duality of the purpose as such, but proceeds on the footing that the expenditure was incurred not for purposes of carrying on business of the company and, therefore, not eligible for an allowance under s. 10(2)(xv) of the Act. In Modi Industries Ltd. v. CIT [1977] 110 ITR 855 (All), one of the questions that arose was, whether an expenditure of Rs. 32,477 incurred by the chairman, of the company as travelling expenses for a tour along with his wife could be claimed as a deduction under s. 37 of the Act. The departmental authorities negatived that claim, but the Tribunal gave partial relief and on a reference, the Allahabad High Court held that the finding was to the effect that though the chairman was allowed to take his wife, it was not justified by any leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Inspector of Taxes) v. Trembath [1956] 1 WLR 437; [1957] 31 ITR 364 (Ch D), dealt with a case of husband and wife, who were the sole directors of a private limited company, who went on a tour to Australia to study refrigeration methods. The company did not resolve that the wife should go to Australia. The Special Commissioners found that the expenses of the taxpayer and his wife for their travel to Australia were wholly and exclusively and necessarily in the performance of their duties while holding office as directors. But, on appeal by the Crown contending that the expenses incurred on the wife could not be deducted, Roxburgh J. held that there is no rule that merely because the expenses incurred by the husband are allowable, the wife's expenses also should be allowed and that the only asset of the wife was that she was a good conversationalist, but that could not have had any value at all, when she did not attend the business premises and though there was a business element in her visit, it was not wholly and exclusively for the company's business purposes and, therefore, her travel expenses could not be claimed as a deduction. This decision also illustrates that the expenses in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly, the expense was not a deductible expense under s. 130(a) of the Income and Corporation Taxes Act, 1970. Even applying , this test, the object of the partner of the assessee at the time when he took his wife along with him on his foreign tour was only to serve or assist him and not for any business purposes, albeit there was also another object, namely, the furtherance or the promotion of the business of the assessee by the partner taking his wife along with him. Even in such a case, it would only be a dual purpose in respect of which the expenditure had been incurred. On. consideration of the principles laid down in the aforesaid decisions, it is difficult to support the conclusion that the expenditure in question was wholly and exclusively laid out for business purposes and we are totally unable to share the view of the Tribunal in this regard. There yet remains the second question referred to us. In the course of the order of the AAC, it is stated that the wife of the partner of the assessee is trained in modern designs and that helped the growth of the business of the assessee and the export sales of the assessee rose to 21.85 lakhs of rupees and as a result of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company of his wife had been successful and that had also helped the growth of the business of the assessee and had pushed up its export sales considerably. We are unable to find any materials in support of this conclusion arrived at by the Tribunal in paragraph 5 of its order. The Supreme Court has pointed out in CIT v. Jain [1973] 87 ITR 370, that the High Court and the Supreme Court have always the jurisdiction to interfere with the findings of the Appellate Tribunal, if it appears that either the Tribunal has misunderstood the statutory language, because the proper construction of the statutory language is a matter of law, or it has arrived at a finding based on no evidence or where the finding is inconsistent with the evidence or contradictory of it, or it has acted on material partly relevant and partly irrelevant or where the Tribunal draws upon its own imagination and imports facts and circumstances not apparent from the record or bases its conclusions on mere conjectures or surmises or where no person judicially acting and properly instructed as to the relevant law could have come to the determination reached. In all such cases, the findings arrived at are vitiated. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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