| Case ID |
052d9618-74a5-4a3a-b590-38993606f9dd |
| Body |
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| Case Number |
Income-tax Reference No.456 of 1995 |
| Decision Date |
Jul 08, 1997 |
| Hearing Date |
|
| Decision |
The Bombay High Court ruled that the disallowance of travel and hotel expenses must be computed based on the actual expenditure incurred per day, adhering to the limits set by Rule 6-D of the Income Tax Rules, 1962. The court clarified that the computation should not aggregate the total expenses for the year but rather focus on each trip's expenses, ensuring that the limits prescribed for various salary brackets and conditions are applied correctly. The ruling emphasized that any allowable deductions must be calculated based on the rules in a manner that reflects the true nature of expenditures incurred during travel. |
| Summary |
In the landmark case of Income-tax Reference No.456 of 1995, the Bombay High Court addressed the complex issue surrounding the disallowance of business expenditure related to travel and hotel accommodations under the Income Tax Act, 1961. The court examined Section 37(3) and Rule 6-D of the Income Tax Rules, 1962, which impose ceilings on such expenditures. The case arose when the Income-tax Officer computed a disallowance based on total expenditures rather than on a per-trip basis, leading to discrepancies in allowable deductions. In its judgment, the court clarified that deductions should be calculated per day, considering various factors such as the employee's salary, location of stay, and whether accommodations were provided free of charge. The decision underscored the importance of adhering to specified limits and conditions, ensuring compliance with the law while allowing businesses to claim legitimate travel-related expenses. This case is significant for tax practitioners and corporations, as it sets a clear precedent on how travel expenditures should be evaluated for tax purposes, promoting transparency and adherence to statutory guidelines. Keywords such as 'Income Tax Act', 'travel expenses', 'hotel charges', and 'deduction limits' are crucial for SEO optimization, attracting attention from legal professionals and businesses seeking clarity in tax regulations. |
| Court |
Bombay High Court
|
| Entities Involved |
AOROW INDIA LTD
|
| Judges |
DR. B.P. SARAF,
DR. PRATIBHA UPASANI
|
| Lawyers |
Dr. V. Balasubramanian,
P.S. Jetley,
T.U. Khatri,
Arun Sathe
|
| Petitioners |
COMMISSIONER OF Income tax
|
| Respondents |
AOROW INDIA LTD
|
| Citations |
1999 SLD 447,
1999 PTD 3103,
(1998) 229 ITR 325
|
| Other Citations |
2016 PTD 1675,
PLD 1997 SC 32
|
| Laws Involved |
Income Tax Act, 1961
|
| Sections |
37(3)
|