SESHASAYEE BROTHERS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE questions referred to this court under section 66(1) of the Income-tax Act were :

(2.) WITH reference to the first question, the facts found were that Mr. Raman who was one of the directors of the assessee firm was deputed by the Mettur Chemical & Industrial Corporation Ltd. of which the assessee firm was the managing agent, to attend a conference of Chemical Manufacturers in London. The corporation bore the expenses of Raman to the extent of Rs. 9,995. The assessee company claimed that advantage was taken of this opportunity to depute Raman to visit other countries and acquaint himself with the manufacturing conditions. The assessee company, it should be remembered, was the managing agent not only of the Mettur Chemical and Industrial Corporation but of various other concerns. Chemicals were not the only line of business in which the assessee company interested itself. Unfortunately, the assessee company failed to furnish any material from which either the Department or the Tribunal could decide what was the object of the visits Mr. Raman was either deputed to undertake or naturally undertook while abroad. No decided onubt the Tribunal was, in our opinion, not correct when it observed that the experience, if any, gained by Mr. Raman by his tour abroad was a benefit of an enduring nature, and that the expenditure incurred should be one a capital nature. Nor can we attach any great importance to the fact, that Mr. Raman did not furnish the assessee company with a written report of what he had done abroad. If the assessee company was satisfied with what Mr. Raman had done, it was not for the Department to point out that there had been no written report by Mr. Raman in the interests of the company, and that the expenses incurred satisfied the tests prescribed by section 10(2)(XV) of the Act. The assessee company did not even furnish details of the places visited by Mr. Raman in the United Kingdom, Switzerland, Canada or the United States. Whether the trip was in part or in whole for pleasure, the Department was not in a position to gauge. In the absence of materials the Department and the Tribunal were certainly justified in coming to the conclusion, that the assessee had failed to establish the requirements of section 10(2)(XV) with reference to this item of expenditure of Rs. 14,625. We therefore, answer the question in the negative and against the assessee.

(3.) WE must confess we are unable to understand what precisely the Tribnal meant. WE have pointed out here was no evidence to come to any possible conclusion, that one of the lines of the business of the assessee company was to promote companies and to sell out after the companies had been formed. Nor was it one of the regular lines of business of the assessee company to acquire licences or permits and sell them. Nor even was it a regular line of business of the assessee company to acquire managing agencies and sell them. though we must point out in this case no case of acquiring and selling any managing agency in return for the receipt of Rs. 41,000 could arise of consideration.