Shama Magazine vs Commissioner of Income Tax

R.C. Lahoti, J.—This is a reference under s. 256(1) of the IT Act, 1961, at the instance of the assessed arising out of the asst. yr. 1975-76 seeking the opinion of the High Court on the following question of law :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in sustaining the disallowance of hotel expenses of partners amounting to Rs. 14,663 in the computation of the business income of the assessee-firm for the asst. yr. 1975-76 ?"

The expenses in question were incurred by the partner of the firm. The Tribunal has disallowed the expenses which exceeded the ceiling prescribed by r. 6D of the IT Rules, 1962. The contention of the assessed was that the ceiling was not applicable to a partner himself incurring the expenses and the partner will not be covered by the expression "an employee or any other person". We do not see any reason to restrict the meaning of the expression "an employee or any other person" so as to exclude a partner there from. A Division Bench of the Andhra Pradesh High Court in the case of Commissioner of Income Tax, Andhra Pradesh, Hyderabad Vs. Autofin Limited, has also interpreted the expression widely so as to include a director or the managing director of a company within the meaning of the expression. In our opinion, a partner of the firm has also to be included within the meaning of "any other person".