TMI Blog1992 (8) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... d the said expenses and recorded a finding that the assessee company had met with personal foreign tour expenses of Mrs. Vinita Mehta. The Assessing Officer formed an opinion that the said amount representing expenses incurred by the assessee company amounted to gift to Mrs. Vinita A. Mehta and as such provisions of GT Act were attracted. 3. Besides, the Assessing Officer in the course of said assessment proceedings found that the assessee company had entered into an agreement on 2nd July, 1978 with Mrs. Lalita Iyer and who owned a plot on which there stood unfinished structure, to obtain on lease from Mrs. Lalita Iyer of the plot for ten years and to purchase the structure thereon with condition that at the end of the lease period of te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the assessee against the said assessment order was dismissed by the CGT(A) and the assessee is now in further appeal before the Tribunal. 5. As regards the first item of Rs. 27,759 the facts are that Mrs. Vinita Mehta and her husband Mr. A.C. Mehta, both were directors of the assessee company and they had undertaken tour in the month of April in the relevant year. A sum of Rs. 16,419 had been spent on air ticket purchased by Mrs. Vinita Mehta while total sum of Rs. 64,390 had been incurred on foreign tour of Mr. A.C. Mehta. In the IT assessment proceedings the ITO observed that lodging and boarding expenses of Mrs. Vinita Mehta had been borne by her husband Mr. A.C. Mehta during foreign tour. He recorded a finding that Mrs. Vinita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vinita Mehta. It is this amount which, according to the GTO, represented gift to Mrs. Vinita Mehta. 6. After hearing the parties, we find that this amount cannot be treated as gift to Mrs. Vinita Mehta. Admittedly Mrs. Vinita Mehta was director of the assessee company when the tour had taken place. Her husband Shri A.C. Mehta was also director of the assessee company and expenses incurred on the tour of her husband have been treated as expenses for the purpose of business. It is immaterial that some of these expenses have been treated as capital expenditure and some have been treated as revenue expenses. The learned Departmental Representative has emphasised the fact that Mrs. Vinita Mehta had travelled under foreign tour scheme which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. It was agreed to be taken on lease for a period of ten years. The unfinished super structure was agreed to be purchased for Rs. 1,52,000. The assessee paid Rs. 1,22,000 to Mrs. Lalita Iyer towards that purchase price and spent Rs. 1,20,680 towards repairs, modifications and addition, etc. The assessee had acquired the said property to provide residential accommodation to the general manager. As already stated, husband of Mrs. Lalita Iyer was general manager and Mrs. Lalita Iyer and her husband were residing in the said premises. At the time when Mr. Iyer retired, the company decided to cancel the agreement and not to recover any amount from Mrs. Lalita Iyer. The question to be decided is whether on the facts and in the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases of CIT vs. Laxmi Cement Distributors Pvt. Ltd. 1976 CTR (Guj) 338 : (1976) 104 ITR 711 (Guj), CIT vs. Dhanrajgiri Raja Narasingiriji 1973 CTR (SC) 445 : (1973) 91 ITR 544 (SC), Sassoon J. David Co. P. Ltd. vs. CIT (1979) 10 CTR (SC) 383 : (1979) 118 ITR 261 (SC), Indian Aluminium Co. Ltd. vs. CIT 1972 CTR (SC) 51 : (1972) 84 ITR 735 (SC) and CIT vs. Malayalam Plantations Ltd. (1964) 53 ITR 140 (SC). 9. The submission on behalf of the Department, on the other hand, was that Mr. Iyer had taken premature retirement and this could not be regarded as a case of giving benefit to an employee so as to form basis for the submission that the transaction was for the purpose of business. It was submitted that normal retirement benefits had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o automatic inference that the expenses were not "bona fide for the purpose of business" within the meaning of said expression in s. 5(1)(xiv) of the GT Act. Under the relevant provisions in GT Act it is not necessary that the amount in question should represent expenditure which was wholly and exclusively for the purpose of business. It is enough if certain benefit which is said to have given rise to transaction of gift, has been given bona fide for the purpose of business. If the benefit is given on the ground of commercial expediency and in order, directly or indirectly, to facilitate the carrying on of the business, the conditions for exemption under s. 5(1)(xiv) would be satisfied. 12. In the present case the assessee company had ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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