Rule 6D travel disallowance includes hotel expenses connected with travel, not just travel costs alone.

Section 37(3) and Rule 6D restrict employee or other travel-related expenditure, including hotel expenses and allowances paid in connection with travel, to the prescribed extent. The Madras High Court noted that the computation under Rule 6D is not limited to transport or travel costs alone; expenses incurred during travel and connected hotel expenditure fall within the disallowance mechanism. Accordingly, hotel expenses incurred in connection with travelling cannot be excluded from the Rule 6D computation, and the issue was answered in favour of the Revenue.

---

---

Issues: Whether, for the purpose of disallowance under Rule 6D of the Income-tax Rules, 1962, the computation was confined to expenditure incurred during the period of travel alone, and whether hotel expenses incurred in connection with travelling were outside the scope of the restriction.

Analysis: Section 37(3) of the Income-tax Act, 1961 expressly restricts, notwithstanding Section 37(1), expenditure incurred in connection with travelling by an employee or any other person, including hotel expenses or allowances paid in connection with such travelling, to the extent prescribed. Rule 6D of the Income-tax Rules, 1962 is framed in the same manner and extends the restriction to such connected expenditure. On that footing, hotel expenses incurred during travel cannot be excluded from the computation.

Conclusion: The disallowance under Rule 6D is not confined to travel expenditure alone and includes hotel expenses incurred in connection with travel. The question was answered in the affirmative, in favour of the Revenue.

---