2002 (6) TMI 165 - AT - Income Tax

Tribunal: Burden of Proof on Business Necessity of Director's Wife's Foreign Trips

Assistant Commissioner Of Income-Tax Versus Smt. Sudha Burman.

Assistant Commissioner Of Income-Tax Versus Smt. Sudha Burman. - ITD 083, 327, TTJ 091, 301, Issues:Challenge to CIT(A) order on deletion of addition under section 2(24)(iv) for expenses on foreign tours of director's wife.Analysis:The appeals filed by the revenue challenge the CIT(A) order regarding the deletion of an addition made under section 2(24)(iv) of the Income-tax Act for expenses on foreign tours of the wife of the director. The common facts reveal that the assessee is the wife of the Chairman of a company and has income from various sources. The Assessing Officer disallowed 50% of the expenses on foreign trips of the director's wife, treating the remaining 50% as the assessee's income. The CIT(A) set aside the Assessing Officer's order, leading to the present appeals.During the appeal hearing, the learned DR argued that the trips were not business-related, placing emphasis on the necessity for the wife's accompanying her husband on these trips. The DR highlighted a resolution authorizing the wife's travel for business purposes but contended that the onus of proving the business necessity lay with the assessee. The AR countered, asserting that the expenses were indeed business-related and should have been allowed. The AR relied on judgments to support the claim that the trips were for business purposes.The Tribunal examined the issue of burden of proof, emphasizing that the initial onus lay on the assessee to prove the business necessity of the trips. Despite a resolution authorizing the expenses, the Tribunal found a lack of justification for each trip undertaken by the director's wife. The Tribunal concluded that the assessee failed to discharge the burden of proof, as no additional evidence substantiating the business nature of the trips was presented.The Tribunal rejected the argument that the burden shifted to the revenue after the resolution, as it would require negative evidence from the revenue, which was not feasible. The Tribunal also distinguished previous judgments cited by the AR, emphasizing the need for specific justification for each trip. Ultimately, the Tribunal held that the CIT(A) erred in interfering with the Assessing Officer's findings, leading to the acceptance of the revenue's appeals.