COMMISSIONER OF INCOME TAX Vs. RUIA M R

JUDGEMENT

(1.) THE only question of law we are called upon to answer in this reference under S. 256(1) of the IT Act, 1961, is :

(2.) IT is evident from the question of law itself that the expenditure in question has been incurred by the company of which the assessee is a director on the foreign trips of the assessee's minor children and a friend by the name of Dr. Madan, the break up of which is as under : Shri Jetly, learned counsel for the Department, strongly relied on the Delhi High Court decision in the case of CIT vs. Nar Hari Dalmia (1971) 80 ITR 454, in support of the Department's case for disallowance. Shri Patel, learned counsel for the assessee, on the other hand, submitted that the question squarely covered by this Court's decision in the case of CIT vs. Shri Rammath A. Podar (1978) 112 ITR 436. Shri Jetly, it may be stated, made an attempt to distinguish this Court's decision by pointing out that the foreign tour expenses involved in that case were of the wife, whereas in the instant case these pertain to the foreign tours of minor children and a friend.

(3.) ON going through this Court's decision in Ramnath A. Podar's case (1978) 112 ITR 436, we find that the ratio of the decision is squarely applicable in this case. No doubt, the expenditure involved in that case was that of the wife of the assessee, a director in the company. The reason given for not treating such an expenditure as the income of the assessee is (i) there is no warrant for treating the value of any benefit or perquisite received by the director's relative as the income of the director, unless there is some legal fiction or a deeming provision by which the value of such benefit or perquisite received by a relative of the director is be regarded as the income of the . Rs.