Delhi Cloth and General Mills Co. Ltd. vs Commissioner of Income Tax

Five questions of law have been referred for our opinion u/s 256(1) of the Income Tax Act, 1961.

In respect of the first four questions, learned counsel for the assessee does not press these questions and, therefore, the reference is returned unanswered in respect of them.

The fifth question reads as follows:

Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the foreign tour expenses of Rs. 40,272 (perhaps Rs. 48,272) spent on foreign tour expenses of Lala Charat Ram, Director of the Company was of an admissible nature and was not of personal nature? (Parenthesis ours).

We find from the facts that Lala Charat Ram has gone abroad as a Member of the Federation of Indian Chambers of Commerce. The Federation is a body representing different business interests and quite clearly when Lala Charat Ram participated as a delegate, it was only to improve the business prospects of the assessee and it was not for personal benefit.

Also, we find that Delhi Cloth and General Mills Co. Ltd. Vs. Commissioner of Income Tax, - a similar question had arisen in respect of a foreign tour undertaken by Lala Charat Ram in connection with a meeting of the Indian Chambers of Commerce. This court held that the expenses incurred in that visit were for business purposes and were in the nature of an admissible deduction.

Under the circumstances, we answer the question by holding that the foreign tour expenses were of an admissible nature and not of a personal nature, in favour of the assessee and against the revenue.

The reference is disposed of accordingly.