Some Case Laws on this isssue may be summarized as under:

1.         https://www.taxtmi.com/caselaws?id=34720

2009 TMI - 34720 - PUNJAB AND HARYANA HIGH COURT

Commissioner of Income Tax Versus M/s. Porrits & Spencers (Asia) Limited

Foreign Tour Expenses of wife - Nexus with the business activity - The Assessing Officer disallowed foreign tour expenses of wife of the Managing Director. The CIT(A) allowed the same but the Tribunal allowed the same to the extent of 50% - held that - 100% expenditure on foreign travel of wife of the Managing Director allowed.

2.         https://www.taxtmi.com/caselaws?id=3150

2008 TMI - 3150 - DELHI HIGH COURT

SMT. SUDHA BURMAN Versus COMMISSIONER OF INCOME-TAX

Income - AO added 50% of the amount in the assessee total income which is borne by the company on several trips undertaken by assessee with his husband managing director of the company -No evidence which proved that trip was for business purpose of the company, hence addition allowed

3.         https://www.taxtmi.com/caselaws?id=9703

2008 TMI - 9703 - BOMBAY High Court 

Commissioner of Income-Tax Versus Bhor Industries P. Limited. 

Expenses u/s 37 - "Whether, Tribunal was right in law in allowing the assessee's claim in respect of foreign travel expenses of Smt. L.R. Patel, who accompanied her husband Shri R.M. Patel, the director of the assessee-company?" - findings recorded by the Tribunal are in accordance with law as such the question referred to should be answered in favour of the assessee

4.         https://www.taxtmi.com/caselaws?id=11193

2008 TMI - 11193 - MADRAS High Court 

Commissioner of Income-Tax Versus Smt. Surekha P. Kothari. 

Whether Tribunal was right in holding that the foreign travel expenses incurred on behalf of the assessee by the company in which her husband is the managing director cannot be assessed in the hands of the assessee under section 2(24)(iv)? - The assessee having received a benefit from the company which had no obligation to provide such a benefit to her but had done so gratuitously, the value of the benefit so received by the assessee is required to be treated as part of her income. - Thus, question referred to us is, answered in favour of the Revenue and against the assessee.

 

Tax treatment of foreign tour expenses: business nexus versus personal benefit determines deductibility and assessability of spouse travel. Whether foreign travel expenses borne by a company for a director's wife are deductible or taxable turns on a factual twofold test: existence of a demonstrable business nexus and whether the expenditure confers a gratuitous personal benefit. If a direct business purpose is shown, the expense may be treated as business expenditure; if gratuitous and without obligation, the value is treated as a perquisite assessable in the hands of the spouse.