TaxTMI 
TaxTMI 
2007 (6) TMI 314
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....urred on foreign visits by the President of the appellant for promoting the business of the company." 2. The appellant is a public limited company engaged in the business of leasing, hire-purchase, merchant banking investments/dealing in shares, inter-corporate loans and other financial and management services. During the relevant year the appellant declared total income of Rs. 8,79,340. The appellant incurred an expenditure of Rs. 24,27,861 on the foreign travelling of its President Mrs. Veena Modi. When asked to furnish details and justification to hold that the expenses are incurred wholly and exclusively for the purpose of business, the assessee stated that Mrs. Veena Modi visited following places : 1.Bombay-Dubai-Bombay (11th April t....
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....ee-company has filed letters from four companies stating that Mrs. Veena Modi had visited them to "discuss business" of TFCCL. The assessee-company vide its letter dated 1-2-2001 has stated a list of business activities to discuss which she had gone to take nine trips abroad. On verification of the details, the Assessing Officer held that for allowability of any expenses under section 37(1), it is essential that such expenditure should be wholly and exclusively for the purpose of business. Though it is claimed that the expenditure were incurred for "exploring new business opportunity", nothing of that sort is available on record. The nature of any expenditure must be adjudged in the light of accepted commercial practice and trading principa....
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....customers, to from strategic alliances and to learn about new instruments/concepts in the overseas capital market. Learned CIT(A), after considering the submissions and the evidence placed before him concluded thus : "I have gone through the contents of the assessment order carefully and considered the submissions of the ld. AR of the appellant. In the case of CIT v. Panipat Woollen & General Mills Co. Ltd. (supra ) Supreme Court has decided two propositions for allowability of deduction under section 37(1) of the Act i.e., the expenditure should be laid out or expended wholly and exclusively for the purpose of business, in the instant case, the assessee has not given any evidence as to what was discussed with the foreign parties for the f....
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....s activities. As the expenditure incurred on foreign trips is not directly intimately related to the business of the company, such expenditure cannot be said to have been incurred wholly and exclusively for the purpose of business. Further, the submission of the appellant that the foreign visits were conducted for the furtherance of business interest of the appellant to meet potential customers, to form strategic alliances and to learn about new instruments/concepts in the overseas capital market, are not reflected at all from the copies of confirmations filed by the assessee. The assessee has also not furnished any other evidence to prove that the foreign visits were conducted for the purpose of business. On careful consideration of the fa....
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....ustify that the expenses are incurred wholly and exclusively for the purpose of business. The expenses should be viewed from the angle of a businessman and not from the revenue's point of view. He accordingly pleaded that the expenses should be allowed as claimed. 2.2 Learned DR, on the other hand, strongly supported the appellate order. He submitted that the remuneration and local travel expenses are allowed on the strength that the same are incurred wholly and exclusively for the purpose of business. However, this fact do not prove that the expenses on foreign travel were also incurred for the purpose of business. Similarly receiving various awards do not justify that the expenses are allowable as such. Though the assessee has pleaded th....
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....ion 10(2)(xv) of Indian Income-tax Act, 1922 (analogous to the provisions of section 37(1) of the Income-tax Act, 1961) the deduction claimed must be expenditure which was laid out or expended wholly and exclusively for the purpose of business. This will naturally depend upon the facts of each case. Hon'ble Delhi High Court in the case of Siddho Mal & Sons v. ITO [1980] 122 ITR 839 held that the word "wholly" refers to the motive, object and purpose of the expenditure and gives jurisdiction to the taxing authorities to examine these matters. Ordinarily, it is for assessee to decide whether any expenditure should be incurred in the course of its business. Such expenditure may be incurred voluntarily and without any necessity and if it has in....