Income Tax Reference v. M/S. West Coast Paper Mills Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICGTION INCOME TAX REFERENCE NO. 189 of 1997 The Commissioner of Income Tax ... Applicant. vs. M/s. West Coast Paper Mills Ltd. ..... Respondent Mr. A. N. Kotangle for Applicant. Mr. S. J. Mehta for Respondent CORAM: V. C. DAGAAND A. S. AGUIAR JJ. Date: 4[th] July, 2005. P. C. : 1. By this reference under section 256(1) of the Income-tax Act theTribunal has referred the following question of law for opinion at theinstance of the Revenue: (1) Whether on the facts and in the circumstances of the case,the Tribunal was right in law in holding that the dis-allowanceunder Rule 6-D has to be worked out taking into considerationthe toal trips undertaken by each person during the year and notby taking each individually?” 1. The above question has been covered by the decision of this court in the case of Commissioner of Income Tax vs. Aorow India Ltd.,reported in [1998] 229 ITR 325 . This court while considering theabove question, which centered around interpretation of Rule 6 Druled as under: “The above interpretation of ours get support from clause (b) of sub rule (2) of rule 6D as substituted in1992. Under the substituted clause (b) also, the ceilingis on the expenditure incurred on travelling (other thanthe expenditure on travel) including hotel expenditureand allowances “per day”. If the expenditure does notexceed Rs.1,500/- per day, it is allowable in full. If itexceeds Rs.1,500 plus 50 per cent (75 per cent?) ofsuch excess expenditure. This clearly goes to show thatthe allowance is to be calculated in the light of the actualexpenditure incurred “per day”.”1992. Under the substituted clause (b) also, the ceilingis on the expenditure incurred on travelling (other thanthe expenditure on travel) including hotel expenditureand allowances “per day”. If the expenditure does notexceed Rs.1,500/- per day, it is allowable in full. If itexceeds Rs.1,500 plus 50 per cent (75 per cent?) ofsuch excess expenditure. This clearly goes to show thatthe allowance is to be calculated in the light of the actualexpenditure incurred “per day”.” 2. In view of the above, the computation has to be made in accordancewith rule 6D, as illustrated in the said judgment wherein the questionreferred to was answered against he assessee and in favour of theRevenue. For the reasons recorded in the said judgment by theApex Court, the matter is remitted back to the Tribunal to recomputethe amount allowable as a deduction under section 37(3) of the Actwith rule 6D, as illustrated in the said judgment wherein the questionreferred to was answered against he assessee and in favour of theRevenue. For the reasons recorded in the said judgment by theApex Court, the matter is remitted back to the Tribunal to recomputethe amount allowable as a deduction under section 37(3) of the Act 3 read with rule 6D of the rules correctly in the lines indicated in thesaid judgment. This reference is disposed of accordingly with noorder as to costs. (V. C. DAGA J. ) -x- (A. S. AGUIAR J.)