Business expenditure nexus upheld for overseas medical treatment incurred during film-production activity; not personal expenditure.

Medical expenditure incurred in the USA for cancer treatment was treated as allowable business expenditure under section 37(1) because it was incurred in the course of the assessee's professional film-production activity abroad. The Court accepted the Tribunal's view that the assessee was engaged in extensive shooting outside India and that the treatment-related outlay had a sufficient business nexus, so it was not personal expenditure. The Revenue's attempt to distinguish the precedent relied on before the Tribunal was rejected, and the claim was allowed in favour of the assessee.

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Issues: Whether the medical expenditure incurred in the USA on the cancer treatment of the proprietor was allowable as business expenditure under section 37(1) of the Income-tax Act, 1961, or was personal expenditure.

Analysis: The claim had been accepted by the Tribunal on the footing that the expenditure was incurred in the course of professional activity abroad. The Court found no reason to disturb that view, noting that the assessee was engaged in film production, the shooting activity was extensively carried out outside India, and the treatment-related expenditure was incurred in that business context. The Revenue's attempt to distinguish the precedent relied upon before the Tribunal was rejected.

Conclusion: The expenditure was held to be allowable under section 37(1) and not personal expenditure; the answer was in favour of the assessee.

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