Madhya Pradesh H.C : The expenditure incurred on the foreign tour of the director and his wife in connection with the medical treatment of the director, was business expenditure of the assessee and allowable as a deduction under the IT Act, 1961

High Court Of Madhya Pradesh : Indore Bench

CIT vs. Steel Ingots (P) Ltd.

Sections 256(2), 37(1)

Asst. Year 1981-82

G.G. Sohani, Actg. C.J. & R.K. Verma, J.

Misc. Civil Case No. 284 of 1985

5th August, 1988

Counsel Appeared

Mukati, for the Revenue : Brajesh Pandiya, for the Assessee

G. SOHANI, ACTG. C. J.:

This is an application under s. 256(2) of the IT Act, 1961 (hereinafter referred to as “the Act”). The material facts giving rise to this application, briefly, are as follows :

The assessee is a private limited company deriving income from manufacture and sale of steel ingots. During the asst. yr. 1981- 82, the assessee incurred expenditure on the foreign travel of its director and his wife in connection with the medical treatment of director. The entire expenses were disallowed by the IAC (Assessment). The appeal preferred before the CIT (A) was dismissed. On further appeal before the Tribunal, the Tribunal held that the expenditure on the foreign tour of Mr. and Mrs. Agrawal and the medical expenses incurred on the treatment of Shri Agrawal were admissible as business expenditure. The Tribunal, accordingly, directed the IAC (Assessment) to work out the allowable expenses incurred by the assessee in the light of the order passed by the Tribunal. Aggrieved by the order passed by the Tribunal, the Revenue sought a reference but as the application submitted by the Revenue in that behalf was rejected, the Revenue has filed this application.

3. Having heard learned counsel for the parties, we have come to the conclusion that the following question of law does arise out of the order passed by the Tribunal :

“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the expenditure incurred on the foreign tour of the director and his wife in connection with the medical treatment of the director, was business expenditure of the assessee and allowable as a deduction under the IT Act, 1961 ?”

4. The application is, therefore, allowed. The Tribunal is directed to state the case and to refer the aforesaid question of law to this Court for its opinion. In the circumstances of the case, parties shall bear their own costs of this application.

[Citation : 175 ITR 290]

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