1999 (7) TMI 52 - HC - Income Tax

High Court excludes miscellaneous and local conveyance expenses from disallowance under Income-tax Rules

The High Court of Bombay ruled in favor of the assessee in a case concerning the exclusion of miscellaneous expenses and local conveyance expenses from ... Business Expenditure, Disallowance Of Expenditure Issues involved: Interpretation of rule 6D of the Income-tax Rules regarding the exclusion of miscellaneous expenses and local conveyance expenses from disallowance.Summary:The High Court of Bombay addressed a reference under section 256(1) of the Income-tax Act, 1961, regarding the exclusion of miscellaneous expenses and local conveyance expenses from the computation of disallowance under rule 6D of the Income-tax Rules. The case involved an assessee-firm engaged in commission agency and brokerage for chemicals and dyes for the assessment years 1980-81 and 1981-82. The Income-tax Officer initially disallowed these expenses, but the Commissioner of Income-tax (Appeals) accepted the assessee's contention, directing the exclusion of conveyance and miscellaneous expenses from the disallowance calculation. The Income-tax Appellate Tribunal upheld this decision, leading to the reference before the High Court.The Court considered a previous decision in CIT v. Gannon Dunkerly and Co. [1993] 114 CTR 56, which clarified that local conveyance expenses and other actual expenses incurred by employees on business tours should not be treated as employee travelling expenses under rule 6D of the Rules. Based on this precedent, the Court affirmed the Tribunal's decision to exclude miscellaneous and local expenses from the disallowance calculation under rule 6D. Consequently, the question posed in the reference was answered in favor of the assessee and against the Revenue.The High Court disposed of the reference accordingly, with no order as to costs.