1992 P T D 452

[Supreme Court of India]

Present: M. N. Venkatachaliah and N. M. Kasliwal, JJ

D.B. MADAN

versus

COMMISSIONER OF INCOME-TAX

Civil Appeals Nos.1552 and 1553 of 1991 arising out of Special Leave Petitions Nos. 14231 and 14232 of 1990 and Special Leave Petition No. 3457 of 1987, decided on 25/03/1991.

(Appeals by special leave against the orders dated September 1, 1986, and November 2, 1989 of the Madras High Court in T. C. P. No.172 of 1986 and T. C. Ps. Nos. 120 and 121 of 1989, respectively).

(a) Income-tax--

----Reference---Application for reference---Earlier decision by High Court on merits in another case---Application rejected on basis of prior decision-- Appeal to Supreme Court---Case directed to be stated.

The High Court had rejected the petitioner's applications for reference on the question whether expenditure on air travel of the assessee's wife who accompanied him for reasons of health was allowable as business expenditure, because the High Court had decided earlier on merits in the case of T.S. Hajee Moosa & Co. (1985) 153 ITR 422, that expenditure on the wife of a senior partner of a firm accompanying him on a foreign tour was not allowable as business expenditure of the firm. The petitioner preferred petitions to the Supreme Court for special leave to appeal from the orders of the High Court rejecting his applications. The Supreme Court granted special leave to the petitioner to appeal and allowed the appeals directing the Tribunal to state a case to the High Court on the question whether the Tribunal was justified in holding that the expenditure on the air travel of the assessee's wife was not incurred wholly and exclusively for the purpose of his business and whether the benefit derived by the wife would detract from the exclusiveness of the outlay.

By the Court: "It cannot always be said that, in all cages where a similar question of law had been answered in an earlier case in a particular way, an identical question of law arising in a later case would cease to be a referable one and, therefore, the course to be adopted is to reject a reference under section 256(2)" of the Income-tax Act, 1961.

C.I.T. v. T.S. Hajee Moosa & Co. (1985) 153 ITR 422 (Mad.) ref.

(b) Income-tax--

----Business expenditure---Expenditure on air travel of assessee's wife accompanying him for health reasons---Whether allowable expenditure-- Question of law.

R.F. Nariman and Mrs. Janaki Ramachandran, Advocates for Appellant.

S.C. Manchanda, Senior Advocate (Ms. A.S ubhashini, Advocate, with him), for Respondent.

ORDER

Heard learned counsel on both sides. Special leave granted.

The High Court declined to call upon the Appellate Tribunal to state a case and refer a question of law said to arise out of the Tribunal's appellate order for its opinion. The circumstance that, in doing so, the High Court relied on a decision which in turn followed an earlier one in C.I.T. v. T.S. Hajee Moosa & Co. (1985) 153 ITR 422 (Mad.) implied that a question of law did arise, but the question, in view of the earlier decision, was held as not a referable question of law. It is always open to the High Court to follow its earlier decision and answer the question of law one way or the other according as whether the view taken in the earlier case commends itself to it or whether, in its opinion, that earlier view needs reconsideration. But it cannot always be said that, in all cases where a similar question of law had been answered in an earlier case in a particular way, an identical question of law arising in a later case would cease to be a referable one and, therefore, the course to be adopted is to reject a reference under section 256(2). .

Inasmuch as, in our opinion, a question of law does arise, the orders of the High Court dated September 1, 1986 and November 2, 1989 are set aside and the Income-tax Appellate Tribunal is directed to state a case and refer the following question of law for the opinion of the High Court:

"Whether, on the facts and in circumstances of the case, the Tribunal was justified in holding that the expenditure on the air travel of the assessee's wife was not incurred wholly and exclusively for the purpose of the business of the assessee and that the benefit derived by the wife would detract from the exclusiveness of the outlay so as to render it ineligible as a deductible expenditure?"

The appeals are disposed of accordingly.

M.B.A.1279/TAppeals disposed of.