COMMISSIONER OF INCOME TAX Vs. N C MEHTA

JUDGEMENT

(1.) At the instance of the revenue, the following question has been referred to this Court for its opinion under the provisions of sec. 256(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') by the Income Tax Appellate Tribunal, Ahmedabad Bench 'A'. "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that for the purpose of determining the disallowance under section 37(3) read with Rule 6D, the restrictions were applicable in respect of expenditure incurred on the travelling by an employee or other person and such restrictions were not applicable to the expenditure incurred for the travelling by the proprietor himself?"

(2.) We have heard learned advocate Shri B.B. Naik appearing for the applicant-revenue. Though served, nobody has appeared for the respondent-assessee.

(3.) The question, which has been referred to this court, pertains to the Assessment Years 1980-81 and 1981-82. During the said years, the assessee, who is running his own business, had incurred expenditure towards travelling. The Assessing Officer disallowed portion of the expenditure claimed towards travelling by invoking the provisions of rule 6D(2) of the Income-tax Rules, 1962 (hereinafter referred to as 'the Rules'). Being aggrieved by the disallowance, the assessee filed an appeal before the CIT (Appeals). It was submitted on behalf of the assessee that the assessee was the sole proprietor and for the purpose of business, he had to travel and had, therefore, incurred expenditure for travelling. The said expenditure was not personal in nature and therefore it was submitted before the CIT (Appeals) that the Assessing Officer had committed an error while disallowing portion of the expenditure under rule 6D(2) of the Rules. It was further submitted that the Assessing Officer ought not to have invoked the provisions of the said rule because the assessee had incurred the expenditure for his own travelling and the expenditure was not incurred either for any employee of the assessee or for any other person as provided in sec. 37(3) of the Act. After hearing the concerned parties, the CIT (Appeals) deleted the disallowance.