2001 (8) TMI 80

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.... upholding disallowance of Rs.1,12,810 under rule 6D of the Income-tax Rules, 1962?" The dispute relates to the assessment year 1976-77. The assessee, a public limited company, claimed that no disallowance under rule 6D of the Income-tax Rules, 1962 (in short, "the Rules"), was required to be made. The stand of the assessee was that boarding and lodging expenses and daily allowance paid to an employee after he reached his destination should not be taken into consideration for the purpose of applying the limits prescribed under rule 6D. The figure of such expenditure was undisputedly Rs.1,22,677. The Income-tax Officer did not accept the assessee's submission and in the draft assessment order in terms of section 144B of the Act proposed a....

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....7(3) and rule 6D which are relevant for the purpose of dispute read as follows: "37. (1) Any expenditure (not being expenditure of the nature described in sections 30 to 36 and section 80VV and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head 'Profits and gains of business or profession'. Explanation.--For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession a....

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....otal number of days spent by such employee or other person outside India (excluding in either case, the number of days required for such travel by a reasonably direct route in the mode of travel adopted by him). Explanation.-For the purpose of this rule, the expression 'days mainly devoted by such employee or other person for the purposes of the business or profession of the assessee outside India' shall include any public holiday in a foreign country on which such employee or other person is required to stay outside India, provided that the working day immediately following such public holiday is mainly devoted by him for the purposes of the business or profession of the assessee. (2) The allowance in respect of expenditure incurred ....

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....nbsp;      applicable in the case of the highest                                                    paid employee of the assessee: ------------------------------------------------------------------------------------------------- Provided that if the stay of such employee or other person outside his headquarters is at Bombay, Calcutta or Delhi, the amount computed at the aforesaid rates shall be increased by a sum equal to fifty per cent. of such amount: Provi....