1. This is an assessee's appeal filed against the orders of the Commissioner (Appeals), dated 15-7-1981 whereby the appeal preferred by the assessee was dismissed and the disallowance of Rs. 10,000 ordered by the ITO was confirmed.
2. The facts leading to the present appeal are as follows. The assessee is a registered firm carrying on business as wholesale dealer in wines.
The assessment year involved is 1978-79 for which the previous year ended on 30-9-1977. It had filed return of income disclosing a total income of Rs. 3,98,480. During the course of the assessment proceedings, a sum of Rs. 12,400 was claimed as deduction towards travelling expenses. There are five partners in the firm. Out of them except Mrs. Sheela R. Ahuja all others are residents of different places outside Hyderabad. The outside partners, according to the ITO, frequently visited Hyderabad with a view to safeguard their interest in the firm. According to him a perusal of the particulars of the travelling expenses revealed that the expenditure incurred consisted of that incurred for air fare to Hyderabad as well as stay in Hyderabad.
The ITO found that such expenditure cannot be said to have been incurred by the firm for its business needs. Therefore, out of the total claim he disallowed Rs. 10,000 towards partners' travelling expenses and added the said sum of Rs. 10,000 to the total income returned. Thus, when the returned income was Rs. 3,98,480 he completed the assessment on a total taxable income of Rs. 4,04,480, by means of his assessment orders dated 14-11-1980. Aggrieved by the assessments thus framed by the ITO, the assessee carried the matter in appeal before the Commissioner (Appeals). The assessee submitted before the Commissioner (Appeals) on behalf of the assessee that a sum of Rs. 12,400 was incurred towards travelling expenses and this amount was debited to the profits and loss account. It was further submitted that the entire sum substantially represented the cost of tickets for air fare of partners for coming to Hyderabad. It was submitted that the partners stay at different parts of the country. It was further submitted that the only purpose of their visit to Hyderabad is in connection with the business carried on by the partnership. Therefore, it was argued that the expenditure is incurred totally for the purpose of assessee's business. The Commissioner (Appeals) who heard the arguments held that no business activities were carried on by the outstation partners in the respective places where they lived. The expenditure was incurred to enable the partners to travel from their respective places of residence to the place of business, i.e., Hyderabad. He followed the decision in Revell v. Directors of Elworthy Bros. & Co. Ltd. 3 TC 12 wherein it was held that in a case where the directors of the company bad to travel from the residence to the meeting place of the company it was held that the travelling expenses were not an allowable deduction from their income. The underlying principle of the said decision was that such expenditure cannot be regarded as laid out for purposes of carrying on business. Therefore, he felt that the disallowance was justified and he dismissed the appeal.
3. Aggrieved by the order of the Commissioner (Appeals) dated 16-7-1981, the assessee has come up in further appeal before this Tribunal and thus the matter stands for our consideration. We have heard Shri Y.R. Ratnakar, learned advocate for the assessee and Shri Gopinath Sidhanthi, the learned departmental representative for the department. A paper compilation consisting of the particulars of travelling expenses incurred for the financial year 1976-77 which is the accounting year for the assessment year under consideration is filed. The total of the expenses is Rs. 12,400.
4. We have perused the particulars of the travelling expenses. Almost all of them were said to have been incurred towards air fare from the respective places of the partners to Hyderabad and even for their stay in Hyderabad. There are some air travels which are not directly to Hyderabad but which are via Bombay, and via Bangalore. It is argued by Shri Rantakar that the partners living in outstations have to come to Hyderabad only for the purpose of business. They have no other interest in Hyderabad and so whatever might have been incurred in their travel should be considered as expenditure laid out for the purpose of business of the assessee-firm and no part of it is liable to be disallowed. It is submitted before us that for the financial year 1975-76 the expenses incurred under this head were Rs. 4,489, for the financial year 1976-77 those were Rs. 1,577 and for the financial year 1977-78 they were Rs. 12,400. The learned advocate for the assessee submitted before us that the ruling in Revell's case (supra) relied on by the Commissioner was overruled by the House of Lords in the case of Owen v. Pook (Inspector of Taxes)  74 ITR 147. We have perused the decision in Owen's case (supra) but in the said decision no mention was made to Revell's case (supra). The facts of the case Owen (supra) disclose that the taxpayer had shown that he performed the duties of his office in two places, namely, the hospital and the place where he received the telephone call and so expenses incurred in travelling from one place to the other were held to have been incurred in the performance of his duties. But in this case, there is no evidence of similar sort. Firstly, we do not know whether the partners living in places outside Hyderabad were active partners or sleeping partners and whether they were entrusted with any duty for managing the affairs of the firm or not. The partnership deed relating to the firm was not filed before us nor was it filed before the lower authorities. We do not know what sort of business compulsions were present at the time when they started the journeys from their respective place to Hyderabad on each of the occasions. Therefore, we are unable to hold that each of the outside partners started their journey from their respective places to Hyderabad only on business purposes. Another decision that was cited before us was that reported in CIT v. D.R. Phatak  99 ITR 14 (Bom.). By a reading of the decision, we are unable to know as to in what way it helped the assessee in this case. The Bombay case is rendered with reference to city compensatory allowance and it was held to be exempt from tax under Section 10(14) of the Income-tax Act, 1961 ('the Act')- In the case of Ramkishan Sunderlal v. CIT  19 ITR 324 (All.) and Sri Ram Mahadeo Prasad v. CIT  24 ITR 176 (All.) it is held that the expenditure on lodging and boarding incurred by a partner visiting an outstation even for purposes of business cannot be allowed for he must preserve his life wherever he might happen to be.
In Cook v. Knott 2 TC 246 the facts are that a solicitor residing and carrying on his profession at Worcester was clerk to justices at Bromyard. He was held not entitled to deduct from the emoluments of his office the cost of travelling between Worcester and Bromyard as the expenses were not incurred in the performance of the duties of the office as solicitor. In Revell's case (supra) it is held that the travelling expenses incurred by the directors of a company from their place of residence to the meeting place of the company cannot be allowed as deduction from their income. In Ricketts v. Colquhoun  10 TC 118 (HL) the facts are that the assessee was a Barrister residing and practising in London. He held the Recordership of Portsmouth. He was assessed to income-tax under schedule E in respect of the emoluments of that office. He claimed the cost of travelling between London and Portsmouth in order to attend the quarter sessions, his hotel expenses at Portsmouth or the cost of the conveyance of his robes to the Court there. The House of Lords held that he was not entitled to any of the said deductions for income-tax purposes. The House of Lords held that in order that travelling expenses may be deductible under the rules they must be expenses which the holder of an office is necessarily obliged to incur--that is to say, obliged by the very fact that he held the office and they must be incurred in the course of performance of those duties. The travelling expenses incurred by the assessee in that case, according to the House of Lords did not satisfy any of those tests. The hotel expenses were also rejected on the ground that a man must eat and sleep somewhere whether he has or has not been engaged in the administration of justice. Normally, he performs those operations in his own home and if he elects to live away from his work so that he must find board and lodging away from home, that is by his own choice and not by reason of any necessity arising out of his employment. He also does not as a rule, eat or sleep in the course of performing his duties. He does either before or after its performance.
From the above, the tests which are to be fulfilled for allowing travelling expenses are two in number: (?) the expenses have actually been incurred; and (ii) the expenses were such which the holder of an office is necessarily obliged to incur, obliged by the very fact that he holds the office. Now let us apply the second of the above two tests to the present case. Is any of the outstation partners, obliged by the very fact that they were partners of the firm to incur the travelling expenses which are in question now. We are of the firm opinion that they are no! obliged to incur such expenditure by the very fact of their being partners of the firm at Hyderabad. In other words, the incurring of these expenses is not inherent in their discharge of duties as partners of the firm. Therefore, we are of the opinion that the disallowance is in order. Hence the appeal is dismissed.