Jeevan Reddy, J.
1. The only question referred is 'whether, on the facts and in the circumstances of the case, the travelling expenses incurred by the managing director of the assessee company are exempt from the purview of rule 6D of the I.T. Rules, 1962, in view of Circular No. 2(44)-CL-VII/74, dt. 1-2-75 of the Ministry of Law, Justice and Company Affairs ?' Though the Department asked for three other questions to be referred, the Tribunal thought it fit to refer only the above question. We have no information whether any application under s. 256(2) has been made by the Department with respect of the refusal of the Tribunal to refer other questions and if so what the position is. In the circumstances, we have no option but to proceed to deal with and answer the question referred to us.
2. This matter came up for hearing on June 20, 1984, and after having been heard partly, we adjourned the case for today, because the learned counsel for the respondent-assessee was not present and also because of the standing counsel's request for time for ascertaining the above facts.
3. Today, at 10-30 a.m., Mr. A. V. S. Ramakrishnaiah appearing for the counsel for the respondent, made a request for adjournment, which we refused, inasmuch as this is the first part-heard case today. As stated above, the standing counsel for the Department also could not furnish the information with respect to the fact whether any application has been made under s. 256(2) in respect of the questions refused to be referred by the Tribunal and if so what happened to such application.
4. Sub-r. (2) of r. 6D of the I.T. Rules, 1962, places a ceiling on the travelling expenses incurred by an employee or any other person to be allowed as expenditure. In this case, the ITO disallowed certain amounts for both the assessment years on the ground that the amounts claimed are in excess of the ceiling prescribed in sub-r. (2) of r. 6D of the Rules. On appeal, however, the AAC allowed the said amount in toto following the judgment of the Tribunal with respect to an earlier year, wherein it appears to have been held that the travelling expenses incurred by the directors are not covered by the said sub-rule. When the matter came before the Tribunal, the Tribunal also referred to its earlier decision and confirmed the judgment of the AAC on this aspect.
5. In this case, the travelling expenses disallowed are that of the managing director. It is really unnecessary for us to go into the question whether the director or for that matter the managing director is an 'employee' of the assessee-company or not. A director or a managing director may or may not be an employee. The ceiling prescribed by sub-r. (2) applies not only in the case of an 'employee' but also in the case of 'any other person'. Sub-r. (2), in so far as it is relevant, reads as follows :
'The allowance in respect of expenditure incurred by an assessee in connection with travelling by an employee or any other person within India outside the headquarters of such employee or other person for the purposes of the business or profession of the assessee shall not exceed the aggregate of the amounts computed as hereunder : ......'
6. There can be little doubt that a managing director falls within the meaning of the expression 'any other person' used in the sub-rule. We are, therefore, of the opinion that the ITO was right in disallowing the travelling expenses in excess of the ceiling as expenditure and that the AAC and the Tribunal were in error in holding that the said sub-rule has no application to a director or the managing director, as the case may be.
7. We shall now deal with the main ground upon which the Tribunal has allowed the entire amount of travelling expenses as deduction. The Tribunal relied upon Circular No. 2(44)-CL-VII/74, dated February 1, 1975, of the Ministry of Law, Justice and Company Affairs. Though its purport has been stated, the circular has not been extracted either in the order of the Tribunal or in the statement of facts. The fact, however, remains that this circular by the Ministry of Law, Justice and Company Affairs is not said to have been issued under a statutory authority, it cannot override or qualify the statutory provisions. The circular is accordingly liable to be ignored. A circular issued by the Ministry of Law, Justice and Company Affairs does not stand on the same footing as a circular of the Central Board of Direct Taxes, issued under s. 119 of the Act, which section empowers the Board to issue appropriate orders, instructions and directions as it may deem fit for the proper administration of the Act. Indeed, this circular has not even been issued by the Ministry of Finance, which Ministry can be said to be directly concerned with the implementation of the I.T. Act. Even with respect to the circulars or press notes issued by the Ministry of Finance, it is brought to our notice, the High of Calcutta has taken the view in Tarak Nath Paul v. CWT : 142ITR468(Cal) , that such press notes or circulars issued by the Ministry of Finance, not having been issued under any authority of the Act (in that case, W.T. Act), could not be taken into account be the (wealth-tax) authorities either for imposing or for deciding the question of imposition of penalty. We agree. Such circulars cannot be read as overriding or qualifying the Act or the Rules, irrespective of the fact whether they are in favour of the assessee or in favour of the Department.
8. For the above reasons, the question referred to us is answered in the negative. i.e., in favour of the Revenue and against the assessee. No costs.