Prospective tax amendment and rule 6D travel expenses: pre-1981 deduction allowed, and employee tour costs excluded from disallowance.

Weighted deduction under section 35B(1)(b)(viii) remained available for assessment year 1980-81 because the deletion of the sub-clause was expressly prospective from 1 April 1981; the Tribunal's view allowing the deduction was therefore not perverse. Local conveyance and other actual expenses incurred by employees on tour were not travelling expenses within rule 6D, so they could not be included in the disallowance computation. The reference application was refused and the Tribunal's findings on both issues were left undisturbed.

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Issues: (i) Whether weighted deduction under section 35B(1)(b)(viii) of the Income-tax Act, 1961 was allowable for assessment year 1980-81 in respect of the specified office-related expenses. (ii) Whether local conveyance expenses and other actual expenses incurred by employees on tour were includible in travelling expenses for disallowance under rule 6D of the Income-tax Rules, 1962.

Issue (i): Whether weighted deduction under section 35B(1)(b)(viii) of the Income-tax Act, 1961 was allowable for assessment year 1980-81 in respect of the specified office-related expenses.

Analysis: The relevant sub-clause was in force during the assessment year in question and its deletion was made operative only from 1-4-1981. The amendment and the CBDT circular both showed that the change was intended to apply prospectively from assessment year 1981-82 onwards. Since the provision continued to operate for assessment year 1980-81, the Tribunal's view that the assessee remained entitled to the weighted deduction could not be treated as perverse.

Conclusion: The issue was answered in favour of the assessee and against the Revenue.

Issue (ii): Whether local conveyance expenses and other actual expenses incurred by employees on tour were includible in travelling expenses for disallowance under rule 6D of the Income-tax Rules, 1962.

Analysis: Local conveyance expenses and other actual expenses incurred by an employee while on tour for the employer's business were distinct from travelling expenses within the meaning of rule 6D. The appellate authority's exclusion of such items from the travelling-expense computation was upheld.

Conclusion: The issue was answered in favour of the assessee and against the Revenue.

Final Conclusion: The application for reference was refused, and the Tribunal's view on both questions was left undisturbed.

Ratio Decidendi: Where the statutory amendment is expressly prospective, the pre-amendment provision continues to govern the relevant assessment year, and amounts that are not truly travelling expenses cannot be brought within rule 6D merely because they were incurred by employees on tour.

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