COMMISSIONER OF INCOME TAX Vs. SUREKHA P KOTHARI

JUDGEMENT

(1.) The assessment year is 1985-86. The questions referred for our consideration are:- "1. Whether on the facts and in the circumstances of the case, the 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 u/s 2 (24) (iv) of the Income-tax Act? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in cancelling the CIT's order u/s 263 dated 27.3.89 holding that the amount of Rs.53,487 being the foreign travel expenses of the assessee met by M/s Kothari Industrial Corporation Ltd. Cannot be treated as perquisite in the hands of assessee?"

(2.) The assessee had accompanied her husband Mr.P.V.Kothari, who was the Managing Director of the company when he went to Europe and U.S.A. between 27.4.1984 and 7.6.1984. The expenditure incurred on her travel was paid by the company, Kothari Industrial Corporation Ltd., of which her husband was the Managing Director. The assessee herself has no official connection with the company except the fact that she was the wife of the Managing Director.

(3.) The Commissioner, exercising his revisional powers under Section 263 of the Act, directed the assessing officer, who had failed to assess this amount in the hands of the assessee to assess the amount of the benefit that the assessee had so received from that company, under Section 2 (24) (iv) of the Act. The Commissioner made that order after holding that the company could not produce any material to substantiate that the business affairs of the company were served in any manner by the assessee accompanying her husband on the foreign tour.