1. However chivalrous we may be inclined to be in this international women's year, we reluctantly feel inclined to reject this reference in the matter of disallowance of the foreign tour expenses of the wife of the managing director of the assessee-company for obvious reasons. The assessee herein is a private limited company. The relevant assessment years are 1960-61 to 1964-65.
2. In accounting year S.Y. 2016 which commenced on November 1, 1959, and ended on October 20, 1960, Shri Prabhulal Sangarraj Shah (non-deceased), who was the managing director of the assessee-company accompanied by his wife, Kokilaben, undertook a tour of Japan. It is claimed by the assessee-company that the managing director had undertaken the tour of Japan for business purposes but since he was keeping indifferent health, he needed some one to look after him. It was, therefore, that his wife Kokilaben had accompanied him on the foreign tour. It is said that the assessee-company had agreed to bear the expenses of Kokilaben, for otherwise the company would have had to engage a nurse to accompany Shri Prabhulal to look after him. The total expenditure incurred for the tour of Japan came to Rs. 19,158.58. The assessee-company claimed deduction of this expenditure as business expenditure. The ITO disallowed the expenditure to the extent of Rs. 9,579 incurred for the tour of Kokilaben. The assessee-company carried the matter in appeal before the AAC who, however, agreed with the contention of the assessee-company and held that Kokilaben, being a Hindu wife, would not ordinarily go to a place like Japan unless it was for a very good reason. The AAC found that her tour had no direct relationship with the business purposes of the company. In spite of this finding, the AAC thought that the ITO was not right in thinking that there should be an immediate and direct relationship between the expenditure incurred and the business purposes of the company and the tour of the managing director was essential which could not have been possible without the company of Kokilaben and, therefore, the expenditure incurred on account of her tour should also be considered as falling within the meaning of commercial expenditure and should have been allowed. The matter was, therefore, carried in appeal before the Tribunal by the ITO. The Tribunal reversed the order of the AAC on this point and agreed with the ITO since in the opinion of the Tribunal the expenses of Rs. 9,597 could not have been said to have been incurred for the business of the assessee-company. At the instance of the assessee, therefore, the following question has been referred to us for our opinion :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in disallowing the foreign tour expenditure of Rs. 9,579 incurred for Smt. Kokilaben P. Shah as being inadmissible in law ?'
3. Mr. B. R. Shah, learned advocate for the assessee-company made a very laudable effort to impress upon us that if this very managing director had engaged a nurse to attend on him as he was maintaining indifferent health, during the tour to Japan which he had undertaken admittedly for the business purpose of the assessee-company, the assessee-company would have certainly got deduction of the expenses on that count. He submitted that in the facts of this case, where it has been found that the managing director was maintaining indifferent health and that he was a vegetarian, it should follow as a necessary corollary that the service of his wife, Kokilaben, to attend on her husband should also be treated on par with that of a nurse and the expenses incurred in respect of the tour of Kokilaben should allowed as business expenses since there is no distinction in principle in the real nature of the expenses. We are sure that tax collectors do not want to discourage business executives and managing directors from undertaking foreign tours for business purposes nor to deprive them of the company of their wives in such tours, but for that we do not think that, in law, it would be permissible for the ITO to allow the expenses incurred for rendering such company, however necessary and enjoyable it may be from the point of view of personal needs of those executives. In our view, these are all personal expenses as explained by the Supreme Court in State of Madras v. Coelho : 53ITR186(SC) , where Mr. Justice Sikri, as he then was, speaking for the court, while negativing the contention urged on behalf of the State that expenses claimed for the payment of interest on monies borrowed were personal expenses, observed as under :
'Personal expenses would include expenses on the person of the assessee or to satisfy his personal needs such as clothes, food, etc., or purposes not related to the business for which the deduction is claimed.'
4. In our opinion, the need of the managing director of the assessee-company to have the services of his wife who was not a qualified or a trained nurse either to attend on him for his indifferent health or to prepare food for him since he happened to be a strict vegetarian would not entitle the assessee-company to claim the proportionate expenses as business expenses.
5. The result is that we answer the question referred to us in the affirmative and against the assessee. The assessee-company shall pay the costs of this reference to the Commissioner of Income-tax.