Business deduction for foreign tour expenses was allowed where partner travel promoted exports and supported the assessee-firm's income.

Foreign tour expenses incurred by partners may qualify as a business deduction where the travel has a clear nexus with the assessee-firm's export activity and is undertaken to promote business. Here, the partners travelled abroad in connection with leather trade promotion for a firm engaged in manufacture, sale and export of leather goods. The expenditure was treated as non-personal, and the trips were found to have been directed at expanding export opportunities and creating conditions likely to increase income. On that basis, the expenses were held allowable as a deduction in the hands of the assessee-firm.

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Issues: Whether the foreign tour expenses incurred by the partners of the assessee-firm were an admissible business deduction for the relevant assessment year, having regard to their nexus with the assessee's export business and the business advantage sought to be obtained.

Analysis: The partners of the assessee-firm travelled abroad to the United Kingdom, the United States of America, and Paris in connection with leather trade promotion. The firm itself was engaged in manufacture, sale, and export of leather goods, and the exported goods bore its individual marks though routed through a sister concern on commission. The expenditure was not personal in nature. The trip was found to have been undertaken to promote exports and to create conditions likely to increase the assessee's income, which established a sufficient business connection for deduction.

Conclusion: The foreign tour expenses were allowable as a deduction in the hands of the assessee-firm and were held to be connected with its business activities.

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