(a) Income-tax---

----Business expenditure---Company---Travel expenses of wives of Directors---Finding by Tribunal that expenditure had been incurred for business purposes---Finding not challenged---Expenditure on travel was deductible---Indian Income Tax Act, 1961, S. 37.

(b) Income-tax---

----Reference---Findings of fact---Facts found by Tribunal are final unless specifically challenged---Indian Income Tax Act, 1961, S. 256.

If the Tribunal does not consider the evidence covering all the matters and bases its findings upon some evidence ignoring other essential material that would amount to a misdirection in law and the findings would give rise to a question liable to be referred to the High Court. Reference of a proper question challenging those findings must first be -sought before those findings can be challenged before the High Court:

Held, that, in the instant case, the Tribunal on the basis of the materials available before them held that the travel expenses claimed by the assessee for the two wives of the Directors were business expenses. This finding had not been challenged. The expenditure was, therefore, deductible.'

CIT v. George Williamson (Assam). Ltd. (No. 2) (1997) 223 ITR 310 (Gauhati); CIT v T. S. Hajee Mossa & Co. (1985) 153 ITR 422 (Mad.); CIT v. Navsari Cotton and Silk Mills Ltd. (1982) 135 ITR 546 (Guj.); Hazarat Pir Mahomed Shah Saheb Roza Committee v. CIT (1967) 63 ITR 490 (SC); Hooghly Trust (Private) Ltd. v. CIT (1969) 73 ITR 685 (SC); India Cements Ltd. v. CIT (1966) 60 ITR 52 (SC) and Sassoon, J. David & Co. (Pvt.) Ltd. v. CIT (1979) 118 ITR 261 (SC) ref.

G. K. Joshi and U. Bhuyan for the Commissioner.

R. Gogoi, H. Roy, A. Dutta and S. Saikia for the Assessee

JUDGMENT

P. G. AGARWAL, J.---At the instance of the Revenue and as per the direction of this Court in Civil Rule No. 6(M) of 1993 the Income-tax Appellate Tribunal has referred the following two questions for the opinion of this Court, under section 256(2) of the Income Tax Act, 1961, for short ("the Act").

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing the Commissioner of Income-tax (Appeals) to admit the assessee's grounds relating to the weighted deduction taken before him and dispose of the matter on merits when the same was not raised before the Assessing Officer?

(2) Whether, undo the facts and circumstances of the case, the Tribunal was justified that the expenses incurred by the assessee in respect of the wives of the Directors were necessary for the business of the assessee-company? "

We have heard Mr. G. K. Joshi, learned standing counsel for the Revenue, assisted by Mr. U. Bhayan, and Shri R. Gogoi, learned counsel for the assessee, assisted by Shri H. Roy.

Shri R. Gogoi, learned counsel for the assessee, has submitted that so far as question No. 1 of the reference is concerned, an identical question was answered by this Court in Income-tax Reference No. 10 of 1995-CIT v. George Williamson (Assam) Ltd. (No.2) (1997) 223 ITR 310, decided on August 22, 1996. Learned counsel for both the sides have, therefore, fairly submitted that in view of the above order, question No. .1 of the present reference needs no further adjudication.

In support of the other question, learned counsel for the Revenue has submitted that the expenses incurred by the assessee in connection with the tour of the wives of the two directors would partake of the character of personal expenses and there was absolutely no material before the Tribunal to' classify the same as business expenses. Section 37(1) of the Act reads as follows:

"37 (1) Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature. of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head 'Profits and gains of business or profession'."

Shri Joshi, learned counsel for the Revenue, has referred to a decision of the Madras High Court in the case of CIT v. T. S. Hajee Moosa & Co. (1985) 153 ITR 422, wherein it was held that the expenses of the wives' travel on foreign tour are in the nature of personal expenses. In the case of Sassoon, J. David & Co. (Pvt.)'Ltd. v. CIT (1979) 118 ITR 261, the apex Court observed that the expression "wholly and exclusively" used in section 10(2) of the Act, 1922, does not mean "necessarily", and. such expenditure, if incurred for promoting business, the assessee can claim deduction. In the case of CIT v. Navsari Cotton and Silk Mills Ltd. (1982) 135 ITR 546, the Gujarat High Court laid down certain guidelines and also some positive and negative tests for deciding whether a particular expenditure is a business expenditure and that will be taken or not.

There is no dispute at the Bar regarding the proposition of law in respect of a business expenditure. Learned counsel-for the assessee submits that the jurisdiction of the High Court under section 256(2) of the Act is advisory in nature and only a question of law is to be answered, if involved. However, the Tribunal on the basis of the materials available before them held that the expenses claimed by the assessee for the two wives are business expenses. According to learned counsel the expenses were in connection with the tour of India by the two wives of the foreign Directors and these two ladies visited the tea gardens of the assessee-company and promoted goodwill. Shri Gogoi further submits that in the absence of a proper question as regards the validity of findings of facts arrived at by the Tribunal, this Court cannot come to any independent conclusion itself on the facts. In support of his contention, learned counsel has referred to the decision of the apex Court in the case of Hooghly Trust (Pvt.) Ltd. v. CIT (1969) 73 ITR 685, wherein the apex Court observed.

"It is not possible to accept the submission made on behalf of the respondent that, in spite of the form in which the question had been referred, it was open to the High Court to examine the correctness of the conclusions of the Tribunal on facts. There can be no dispute that, if the Tribunal does not consider the evidence covering all the matters and bases its findings upon some evidence only ignoring other essential material, that would amount to a misdirection in law and the findings would give rise to a question liable to be referred to the High Court. But it is equally well-settled that, if it is sought to raise the question about the validity of the findings on fact for one reason or another, reference of a property question challenging those findings must first be sought before those findings can be challenged before the High Court; See India Cements Ltd. v. CIT (1966) 60 ITR 52, (SC), and Hazarat Pir mahomed Shah Saheb Roza Committee v. CIT (1967) 63 ITR 490, 496 (SC). No attempt was made before the Tribunal to have any such question referred and in the absence of a proper question it was not open to the High Court to accept the findings of the Appellate Assistant Commissioner in preference to those given by the Tribunal or to come to any independent conclusion itself on facts."

As the validity of the findings of fact arrived at by the Tribunal has not been challenged, this Court cannot entertain the same. The answer to question No.2 of the reference is, therefore, answered against the Revenue and in favour of the assessee. The reference in respect of the other question stands answered as per order in Income-tax Reference No. 10 of 1995, as stated above.

M.B.A./3392/FC ??????????????????????????????????????????????????????? ??????????????????????? Reference answered.