COMMISSIONER OF INCOME TAX Vs. KRISHNA RAO S

JUDGEMENT

(1.) THIS is a reference made under Section 66(1) of the Income-tax Act, 1922, and the question which we are called upon to consider is:

(2.) THE relevant facts are that the respondent is a Hindu undivided family of which Shri S. Krishna Rao is the manager. THE joint Hindu family owns a printing press know as the "Citizen Press" at Secunderabad. During the accounting year, which ended on the 30th of June, 1960 the assessee representing the Andhra Pradesh Printers' Association attended at Amsterdam the International Printers' Conference. Apart from attending the International Printers' Conference at Amsterdam, the assessee, Krishna Rao, at that place saw the connected exhibition of printing equipment and machinery and also sought acquaintance with the techniques of the use of this machinery. Besides what he did at Amsterdam, Sri Krishna Rao also visited the United Kingdom, Germany, Italy and Switzerland. In the United Kingdom, he stayed at London for 10 days, In Germany, Italy and Switzerland, he stayed for 5 days each.

(3.) THE assessee, therefore, carried the matter in appeal to the Appellate Assistant Commissioner. THE Appellate Assistant Commissioner disagreed with the reasoning and conclusion of the Income-tax Officer. He was of the opinion that Sri Krishna Rao's visit to Amsterdam was for the purpose of his business. He was, however, of the opinion that the short stay of 5 days in Germany, Italy and Switzerland could not have enured to the advantage of the business of the assessee. THEre was also no evidence of his having spent any time with any printing establishments or printing machinery manufacturers in those countries. It was, however, found that during Sri Krisha Roa's visit to the United Kingdom he spent some time in visiting factories. THE Appellate Assistant Commissioner a1so held that attending an international conference as a delegate had a certain goodwill and prestige value which would be in the interest of business when the conference pertained to the business which he himself, was carrying on. He was also getting acquainted with new techniques and new equipment relating to his own business which had its own value. He ultimately held that the expenditure incurred purely on his personal visit should alone be disallowed. Though the trips to Germany, Italy and Switzerland had been purely for purposes which involved no extra expenditure on air fare, the entire personal expenditure by air, therefore, was allowed. Out of the balance, a portion of the expenses in the United Kingdom and the expenses in Germany, Italy and Switzerland were disallowed as personal expenditure. Thus on the whole Rs, 2,000 were disallowed and deduction to the extent of Rs. 5,160 was permitted.