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Additional Commissioner of Income-tax Vs. Dr. M.K. Krishna Menon - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case No. 126 of 1974 (Reference No. 19 of 1974)
Judge
Reported in[1977]109ITR204(Mad)
ActsIncome Tax Act, 1961 - Sections 16
AppellantAdditional Commissioner of Income-tax
RespondentDr. M.K. Krishna Menon
Appellant AdvocateA.N. Rangaswami and ;Nalini Chidambaram, Advs.
Respondent AdvocateK.C. Rajappa, Adv.
Cases ReferredA. K. Venkiteswaran v. Commissioner of Income
Excerpt:
.....will clearly show that there is no requirement by the government under that order that any officer of the government should spend any money out of his remuneration for any purpose whatever. this will clearly show that the tribunal itself was aware of the weakness of its reasoning that the order of the government enjoined the assessee to spend out of his remuneration for undertaking the foreign tour in question. what the section requires is that the conditions of service should enjoin, oblige or direct a person like the assessee to spend out of his pocket wholly, necessarily and exclusively in the performance of his duties. the fact that an officer of the government thought that his spending money for undertaking a foreign study tour would enable him to perform his duties better or..........the tribunal. the tribunal held that g.o. ms. no. 1557/ph dated october 4, 1967, enjoined senior medical officers to go abroad to enable them to know the latest developments in their special fields and make use of that knowledge in the day to day work in hospitals by dissemination to their juniors and also by their own application in handling of patients. according to the tribunal, the assessee undertook the foreign tour to study the latest trends and developments in his field of work and submitted a report to the government as required under the g.o. referred to above. hence, the tribunal held that it was an integral part of the duty of the assessee to go abroad, study and observe the advances and latest developments in the specialised fields of obstetrics and gynaecology and study.....
Judgment:

Ismail, J.

1. The assessee in this case after retirement was re-employed as the Director, Institute of Obstetrics and Gynaecology, Government Hospital for Women and Children, Madras. For the period September 18, 1967, to October 8, 1967, the assessee visited the Universities of Sydney, New South Wales, Melbourne and Adelaide, to observe the modern trends in training of postgraduates, research and fertility control as well as the treatment of cancer of the cervix and ovary. During this study tour the assessee incurred an expenditure of Rs. 8,787 and claimed it as a deduction under Section 16{v) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'). The Income-tax Officer came to the conclusion that the assessee was not required by the conditions of service to incur this expenditure and accordingly disallowed the claim. On appeal, the Appellate Assistant Commissioner held that the expenses incurred by the assessee for visiting the countries abroad cannot be said to have been made in the normal performance of his duties of employment and even the terms and conditions of G.O. Ms. No. 1557/PH dated October 4, 1967, did not compel the assessee to visit foreign countries so as to be considered as a condition of his service and in the circumstances the assessee's claim for deduction under Section 16(v) could not be allowed. The assessee further went in appeal to the Tribunal. The Tribunal held that G.O. Ms. No. 1557/PH dated October 4, 1967, enjoined senior medical officers to go abroad to enable them to know the latest developments in their special fields and make use of that knowledge in the day to day work in hospitals by dissemination to their juniors and also by their own application in handling of patients. According to the Tribunal, the assessee undertook the foreign tour to study the latest trends and developments in his field of work and submitted a report to the Government as required under the G.O. referred to above. Hence, the Tribunal held that it was an integral part of the duty of the assessee to go abroad, study and observe the advances and latest developments in the specialised fields of obstetrics and gynaecology and study the methods of research work done in those fields so that the knowledge and experience gained may be disseminated to the juniors and apply this knowledge in handling the patients. The result was that the Tribunal allowed the claim of the assessee for deduction of the said amount under Section 16(v) of the Act. It is the correctness of this conclusion of the Tribunal that is challenged in the present reference at the instance of the Additional Commissioner of Income-tax, Madras-II, in the form of the following question referred to this court under Section 256(1) of the Act:

'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the expenditure of Rs. 8,787 incurred by the assessee on foreign tour should be allowed as an admissible deduction under Section 16(v) of the Income-tax Act, 1961 ?'

2. The first thing to be considered is the language of Section 16(v) of the Act. That section is as follows :

'16. The income chargeable under the head 'Salaries' shall be computed after making the following deductions, namely:--..... (v) any amount actually expended by the assessee, not being an amount expended on the purchase of books or other publications, or on entertainment or on the maintenance of a conveyance, which, by the conditions of his service, he is required to spend out of his remuneration wholly, necessarily and exclusively in the performance of his duties.'

3. Thus, it will be seen that the following requirements must be satisfied if a deduction can be allowed under the above provision :

(1) The amount must be actually expended by the assessee.

(2) The amount must be expended out of the remuneration of the assessee wholly, necessarily and exclusively in the performance of his duties.

(3) The assessee must have been required to spend the said amount out of his remuneration by the conditions of his service.

4. Consequently, unless all the above three requirements are cumulatively satisfied, the assessee will not be entitled to the deduction provided for in the above statutory provision. For the purpose of this case even assuming that the first two requirements are satisfied, we are of the opinion that the third requirement is not satisfied. The expression used in the statutory provision is 'by the conditions of his service he is required to spend out of his remuneration'. For the purpose of showing that there was such a requirement, the only document on which reliance was placed, which found favour with the Tribunal, was the order of the Government referred to already. The said order of the Government has been annexed to the statement of the case of the Tribunal as annexure 'D'. The said order reads as follows :

'A number of medical officers of the Madras Medical Service are being permitted from time to time to attend important scientific conferences abroad. The object of allowing the medical officers especially senior officers to go abroad is to enable them to know the latest developments in their special fields and make use of that knowledge in their day to day work in hospitals by dissemination to their juniors and also by their own application, in the handling of patients. The Government considers that a clear procedure should be laid down by which the knowledge gained by the officers who go abroad will be really made available to all the members of the profession. The Director of Medical Education is requested to take action to lay down a clear procedure in the matter and send a report to Government on the action taken in due course. 2. The Government have decided that the medical officers who go abroad to attend scientific conferences should be asked to submit a report to Government through the proper channel, on the conference and also on the important issues discussed. The Director of Medical Education is requested to issue necessary instructions in this regard to the medical officers concerned as and when they are permitted to go abroad to attend conferences and forward their reports to Government.'

5. A perusal of this order will clearly show that there is no requirement by the Government under that order that any officer of the Government should spend any money out of his remuneration for any purpose whatever. As a matter of fact, the order of the Government extracted above has nothing whatever to do with a foreign tour undertaken by a Government officer at his expense, but, on the other hand, it would appear to constitute a direction to the Director of Medical Education to lay down a clear procedure in permitting medical officers of the Madras Medical Service from time to time to attend important scientific conferences abroad and to enunciate the object and the purpose of granting such permission. As a matter of fact, the Tribunal itself though in one portion of its order stated that the said order of the Government enjoined a senior medical officer to go abroad to enable him to know the latest developments in his special fields and make use of that knowledge in his day to day wort in hospitals by dissemination to the juniors and also by his own application in handling of patients, it ended up by saying that the foreign tour undertaken by the assessee was inherent and implicit in the conditions of his service by virtue of the official position that the assessee occupied. This will clearly show that the Tribunal itself was aware of the weakness of its reasoning that the order of the Government enjoined the assessee to spend out of his remuneration for undertaking the foreign tour in question. What the section requires is that the conditions of service should enjoin, oblige or direct a person like the assessee to spend out of his pocket wholly, necessarily and exclusively in the performance of his duties. The fact that an officer of the Government thought that his spending money for undertaking a foreign study tour would enable him to perform his duties better or more satisfactorily would not bring the case within the scope of Section 16(v) of the Act because what the section requires is an obligation imposed by the conditions of service on a person like the assessee to spend out of his remuneration for the purposes referred to above. As we pointed out already, apart from the G. 0. referred to above no other material was produced before the Tribunal to show that the conditions of service of the assessee imposed any such obligation on the assessee. Hence, we are of the opinion that the Tribunal was in error in its conclusion that under Section 16(v) of the Act, the assessee was entitled to the deduction of Rs. 8,787. In this connection, our attention was drawn to two decisions, viz., (1) A. K. Venkiteswaran v. Commissioner of Income-tax : [1973]92ITR233(Ker) , a decision of the Kerala High Court and (2) Commissioner of Income-tax v. D. R. Phatak : [1975]99ITR14(Bom) . Though the former decision dealt with Section 16(v) of the Act, as it stood at the relevant time, and the latter decision dealt with Section 10(14) of the Act, still neither of the decisions considered the case with reference to the particular aspect which we have to consider in the present case. Under these circumstances, we answer the question referred to this court in the negative and against the assessee. There will be no order as to costs.


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