High Court
Case Details
ITA 2/2012 BEFORE THE HON’BLE MR JUSTICE I A ANSARI THE HON’BLE MR. JUSTICE P. K. MUSAHARY The factual background, which led to the filing of the present appeal, m
Legal Reasoning
This is an appeal, under Section 260A of the Income Tax Act, 1961 (herei nafter referred to as ’the Act’), filed by the Commissioner of Income Tax, Guwah ati-II, putting to challenge the order, dated 31.08.2008, passed by the Income T ax Appellate Tribunal (Gauhati Bench), Guwahati, in ITA No. 109 (Gau)/2006 and I TA No. 129 (Gau)/2007, for the Assessment Year 2002-2003. 2. ay, in brief, be set out as under: (i) The respondent herein, namely, M/s Williamson Tea (Assam) Limited, is a comp any (hereinafter referred to as ’the company’), registered under the Companies A ct, 1956, and engaged in the business of growing, manufacturing and selling of t ea. The respondent company is an assessee under the Income Tax Act, 1961 (herei nafter referred to as ’the Act’), and falls within the jurisdiction of the appel lant herein. During the year 2003-2003, while filing return of income, the resp ondent company claimed a sum of Rs. 53,97,556/- as Foreign Travel Expenses, in respect of the travel trips to foreign countries undertaken by its Directors and Executives in connection with promotion of sale of their products. The respond ent company also claimed a sum of Rs. 46,54,687/- as 100% depreciation on the expenditure incurred in connection with erection of fencing at their tea garden, another sum of Rs. 20,31,129/- as expenditure incurred in connection with pub licity, Rs. 1,00,000/- as expenditure incurred on subscription made by the respo ndent company during Bihu and Puja, 100% depreciation on certain Vibro Fluid Bed Dryers, an amount of Rs. 3,01,94,000/- as cess on green leaf. The respondent c ompany had also claimed deduction under Section 80HHC of the Act. (ii) While assessing the tax payable by the respondent company, the Assessing Officer interfered with various claims of deduction, which the respondent compa ny had made. The deductions, which were disallowed, and the reasons assigned th erefore, can be enumerated as under: While dealing with the respondent company’s claim of Rs. 53,97,556/-, a (a) s Foreign Travel Expenses, the Assessing Officer noted that the respondent herei n had appointed its selling agent, in London, for sale of tea in overseas market and used to pay commission, brokerage, etc, to its selling agent, that three no n-resident Directors of the assessee company were permanently residing in U. K. looking after the respondent company’s overseas business and since three Directo rs of the respondent company had been residing in London itself and they had bee n doing their job properly, there was no necessity to undertake foreign trips by the Directors and senior officers of the respondent company for promotion of sa le of their products. The Assessing Officer further noted that as no overseas c onferences could be proved to have been held by the Directors/Executives of the respondent company, it was not clear whether the said trips were for business pu rposes or not and, above all, the respondent company had failed to submit any do cumentary evidence to establish any activities in connection with promotion of s ale, as had been claimed by the respondent company. On the grounds, as noted by him, an amount of Rs. 17,99,185/-, i.e., one-third of the Travel Expenses, clai med by the respondent company, was disallowed by the Assessing Officer holding the expenditure to be of non-trading in nature. The Assessing Officer disallowed an amount of Rs. 46,54,687/-, claimed (b) by the respondent company to have been incurred in connection with fencing as 10 0% depreciation on the expenditure incurred. The Assessing Officer observed tha t the purpose of fencing was to protect tea bushes from being transgressed upon by cattle or stray animals and that the respondent company had acquired assets ( tea bushes) with lasting value and, therefore, the respondent company was not en titled to 100% depreciation but to normal depreciation. (c) The Assessing Officer also disallowed a sum of Rs. 11,65,000/-, out of the s um of Rs. 20,31,129/-, claimed by the respondent company, on account of publicit y expenses, on the ground that the respondent company could not show any busines s connection with the business organizations to whom the said amount of Rs. 11, 65,000/- was shown to have been paid. (d) As against the claim of 100% depreciation on Vibro Fluid Bed Drayer, the Assessing Officer disallowed 100% depreciation and held that the respondent com pany was entitled to only 25% depreciation. (e) The Assessing Officer disallowed the respondent company’s claim of Rs. 1 ,00,000/-, as subscription expenditure, on the ground that the expenses were non -trading in nature. (f) As regards the respondent company’s claim of Rs. 3,01,94,000/-, as cess on green leaf, the Assessing Officer rejected the respondent company’s claim and observed that in view of the judgement of this High Court, in Jorehat Group Lim ited vs. Agri. ITO, reported in 226 IT 622, the amount of cess paid is to be ded ucted from 60% of the composite agricultural income. (g) As regards the respondent company’s claim for deduction under Section 80 HHC of the Income Tax Act, the Assessing Officer observed that while claiming th e amount of deduction, the respondent company had not deducted commission, broke rage, selling and other expenses, which was to the tune of Rs. 7,47,26,773/-, an d rejected the claim of the respondent company for deduction under Section 80HHC . (iii) Aggrieved by the Assessing Officer’s refusal to approve the resp ondent company’s claims, as mentioned above, the respondent company filed an app eal before the Commissioner of Income Tax (Appeals)-II, Guwahati, which was regi stered as GWA 40/2005-06.
Decision
By order, dated 01.09.2006, the Commissioner of Income Tax (Appe als) disposed of the said GWA 40/2005-06, wherein it was observed and decided as (iv) follows: (a) With regard to ground No. 1 of the appeal, which was against disallowanc e of the respondent company’s claim of Rs. 17,99,185/- under Foreign Travel Expe nses, the Commissioner not only upheld the Assessing Officer’s decision in disa llowing the respondent company’s claim for a sum of Rs. 17,99,185/- on the groun d that the respondent company had furnished inaccurate particulars of income, bu t also directed the Assessing Officer to initiate penalty proceedings against th e respondent company and to enhance the income of the respondent company by a fu rther sum of Rs. 14,76,687/-. (b) That regarding ground Nos. 2, 3 and 4 of the appeal, which were in respe ct of the disallowance of fencing expenses amounting to 46,54,687/-, the Commiss ioner held that the respondent company was entitled to get the relief and direct ed the Assessing Officer to allow the claim of the respondent company. (c) As regards ground No. 5 of the appeal, which was against disallowance of 100% depreciation claimed by the respondent company on Vibro Fluid Bed Drayer, the Commissioner directed the Assessing Officer to allow the claim of the respon dent company. (d) As regards the respondent company’s claim of Rs. 11,65,000/- on account of publicity expenses, an amount of Rs. 2,65,000/- was allowed by the Commission er. However, the Commissioner confirmed the disallowance of deduction by the As sessing Officer to the extent of Rs. 9,00,000/- . With regard to the respondent company’s claim of Rs. 1,00,000/- on accou (e) nt of subscription towards Bihu and Puja, etc., the Commissioner observed that t he expenses, incurred by the respondent company towards subscription, were not e xcessive or unreasonable and accordingly allowed the respondent company’s claim. As regard ground Nos. 10 and 11 of the appeal, which were against reject (f) ion of the respondent company’s claim of Rs. 3,01,94,000/-, as cess on green lea f, the Commissioner rejected the claim of the respondent company. (g) That as regards the respondent company’s claim for deduction under Secti on 80HHC of the Act, the Commissioner allowed the respondent company’s claim for deduction under Section 80HHC. 3. Still dissatisfied by the order, dated 01.09.2006, passed by the Commiss ioner of Income Tax (Appeals), the respondent company preferred two appeals befo re the Income Tax Appellate Tribunal, Gauhati Bench (hereinafter referred to as ’the Tribunal’), at Guwahati. The said two appeals came to be registered as ITA No. 109/2006 and ITA No. 129/2007. 4. By order, dated 31.08.2007, the learned Tribunal has partly allowed the two appeals. While considering the respondent company’s grievance against reject ion of their claim of Rs. 32,75,872/- as Foreign Travel Expenses, the learned Tr ibunal disagreed with the findings of the Commissioner of Income Tax (Appeals), whereby the entire Foreign Travel Expenses of Directors were disallowed, and hel d that, out of the said claimed amount of Rs. 32,75,872/, only an amount of Rs. 3,85,217/- was not incurred for business purpose and, consequently, allowed the remaining amount of Rs. 28,90,655/- incurred by respondent company as their For eign Travel Expenses. While dealing with this ground of appeal, the learned Tri bunal observed as under: (cid:28)During the relevant year the assesse’s export turnover was over Rs. 100 crores. If for promoting export senior executives of the company undertook Foreign trav el then the expenditure could not be considered for non-business purposes. It wa s not correct on the part of CIT(A) to expect that the assessee should depend so lely on the directors and executives were not involved in export promotion. The visits to UK and Kenya were undertaken by garden managers who were actively asso ciated with growing and manufacture of tea and were competent to study the metho ds of competitors and effectively interact with foreign customers for export pro motion. Having regard to the facts therefore we do not find any merit in the CIT (A)’s action of fully disallowing the foreign travel expenditure of garden manag ers. We also do not find merit in CIT(A)’s order in disallowing the entire expen diture on visits to India by the representatives of the London office because ha ving regard to assessee’s substantial exposure to overseas trade and large holdi ng of the assessee being with foreign promoters; visits to India for monitoring business operations was business necessity. Such expenditure was incurred by th e assessee in the earlier year also which was allowed in the past assessments. W e therefore see no reason for CIT(A) to disallow entire expenditure on visits of representatives of the London office. (cid:29) 5. The learned Tribunal dismissed the respondent company’s grievance agains t the initiation of penalty proceeding under Section 271(1)(c) of the Act on the ground that no right of appeal was provided in the Act against initiation of pe nalty. 6. As against the respondent company’s claim of Rs. 11,65,000/- on account of publicity expenses vis-à-vis the Commissioner’s order allowing an amount of Rs. 2,65,000/- to the respondent company and disallowing the claim to the extent of Rs. 9,00,000/-, the learned Tribunal disagreed with the view of the Commiss ioner and held that the expenditure of Rs. 11,65,000/-, as claimed by the respon dent company, was fully allowable inasmuch as the expenditure had been incurred for business purposes. While coming to this conclusion, the learned Tribunal has relied upon the case of Assam Brooke Ltd. vs. CIT (267 ITR 121), wherein the as sessee had paid Rs. 5,00,000/- towards renovation of a building of the club of w hich the employees of the assessee were members and the Calcutta High Court held the amount to be a business expenditure. 7. While dealing with the respondent company’s grievance against the Assess ing Officer as well as the Commissioner of Income Tax (Appeals) rejecting the re spondent company’s claim of Rs. 3,01,94,000/-, as cess on green leaf, the learne d Tribunal decided the issue in favour of the respondent company and allowed ded uction for cess paid on green leaf in computing income from growing and manufact uring of tea before applying Rule 8 of the Income Tax Rules, 1962. While coming to this conclusion, the learned Tribunal relied upon the decision of the Gauhat i High Court, in Assam Co. Ltd. vs. CIT (275 ITR 609) and Jorahaut Group Ltd. Vs . ACIT (289 ITR 422). 8. Being aggrieved by the order of the learned Tribunal, particularly, lear ned Tribunal’s deletion of the disallowance of Rs. 28,90,655/-, on account of Fo reign Travel Expenses, as had been disallowed by the Assessing Officer and uphel d by the Commissioner, Income Tax (Appeals), and the order of the learned Tribun al deleting the disallowance of Rs. 9,00,000/-, as had been disallowed by the A ssessing Officer, under head publicity expenses, and as confirmed by the Commiss ioner, Income Tax (Appeals), the Commissioner of Income Tax has preferred the pr esent appeal, as indicated above, under Section 260A of the Act. 9. We have heard Mr. G. K. Joshi, learned Senior Counsel, appearing on beha lf of the appellant, and Ms. Nitu Hawelia, learned counsel, appearing for the re spondent company. 10. stions have, primarily, arisen for determination: (i) Whether, in the facts and circumstances of the present case, the learned Tribunal was justified and correct in deleting the disallowance of Rs. 28,90,65 5/-, under the head of Foreign Travel Expenses, as had been made by the Assessin g Officer and upheld by the first appellate authority and whether the said decis ion is perverse ? (ii) Whether, in the facts and circumstances of the present case, the learned Tribunal was justified and correct in law in deleting the disallowance of Rs. 9 ,00,000/-, as had been made by the Assessing Officer, under head publicity expen ses, and as confirmed by the first appellate authority and whether the said deci sion is perverse ? While considering the present appeal, we note that the following two que 11. Mr. G. K. Joshi, learned Senior counsel, submits that the learned Tribun al cannot be held to be justified in deleting the disallowances, particularly, w hen there is no finding on the observations made by the Assessing Officer as wel l as the observations of the Commissioner of Income Tax (Appeals). The learned S enior counsel further submits that as per Section 37 of the Act, expenditure inc urred wholly for business purposes is only allowable and it was, therefore, incu mbent, on the part of the respondent company, to prove, by submitting materials, that the expenses, so incurred, were laid out wholly and exclusively for busine ss purpose. The learned Senior counsel also submits that each and every expense , incurred in course of business, is not allowable under Section 37 of the Act a nd, in order to enjoy the benefit of exemption under the Act, the expenditure mu st be proved, by adducing substantial evidence, that it was laid out wholly and exclusively for business. In the instant case, contends Mr. Joshi, the responde nt company had not produced evidence in support of its claim that the expenditur e, claimed on account of Foreign Trips, was wholly and exclusively for business purpose, though it was incumbent, on the part of the respondent company, to give details as to what the representatives of the company did in the foreign countr ies for the business of the respondent company. 12. In support of his contention, Mr. Joshi has relied upon the decision of the Supreme Court, in Bengal Enamel Works Ltd. Vs CIT (77 ITR 119), wherein the Supreme Court has held that the taxing authorities may disallow an expenditure c laimed on the ground that the payment was not made or was not incurred by the as sessee for its business or it was not laid out wholly and exclusively in the bus iness for the assessee. The Supreme Court has further held that, in doing so, th e authority does not substitute its own view of how an assesse’s business affair s should be maintained and proceed to disallow the expenditure if the condition of its admissibility is absent. 13. Ms. Nitu Hawelia, learned counsel, appearing for the respondent company, contends that the respondent company, having furnished all the details of expen ses incurred by the respondent company, cannot be accused of not submitting the necessary documents and evidence in support of the expenditure incurred by it. M s. Hawelia also contends that it is for an assessee, such as, the respondent com pany, to decide, in the interest of promoting its business, whether any expendit ure is to be incurred, in the course of business, and whether such expenses are to be incurred voluntarily. The learned counsel for the respondent company submi ts that the respondent company can incur certain expenditure and claim deduction s of the same under Section 37 even though there was no necessity to incur such expenditure. Ms. Hawelia further contends that in order to make an expenditure d eductible under Section 37 of the Act, it is not necessary that the primary moti ve to incur the expenditure has to be directly earn income thereby. According t o the learned counsel for the respondent company, the expenditure incurred, thou gh may not be with a view to obtain direct and immediate benefit, but for the pu rpose of commercial expediency as well as to indirectly facilitate carrying on o f business, yet such an expenditure would be regarded as having been incurred, w holly and exclusively, for the purpose of business. The learned counsel for the respondent company further submits that while considering whether a given case f alls within the scope of Section 37 or not, one of the tests to be applied is wh ether the expenditure is incurred by the assessee as a trader or in some other c apacity. If the expenditure is incurred by an assessee (respondent company in th e present case) in his/her capacity as a trader, then, it would come within the scope of Section 37 and shall be deductible as an expenditure incurred for the p urpose of business. 14. In support of her contention that, while applying the test of commercial expediency for determining as to whether an expenditure is wholly and exclusive ly laid out for the purpose of business, the reasonableness of the expenditure h as to be judged from the point of view of businessman and not of the Income Tax Department, Ms. Hawelia has relied on a decision of the Supreme Court, in J. K. Woolen Manufacturers vs. CIT (72 ITR 612). Ms. Hawelia categorically submits tha t the similar expenses, in connection with Foreign Travel, had been incurred by the company in the earlier years, which were allowed by the Commissioner of Inco me Tax (Appeals), and the same were accepted by the Department concerned. Since , in the previous years, similar expenses were allowed, the department cannot, s ubmits Ms. Hawelia, take a different view of the matter, on the same issue, at a latter stage. 15. As regards the disallowance on account of publicity expenses, Ms. Haweli a, learned counsel for the respondent company, submits that so long as the expen diture incurred is not for oblique purposes, outside the course of business, or for some improper motives, the authorities should shun a bureaucratic approach a nd should examine the issue from the point of view of businessman and not from t he point of view of revenue. In support of her contention, learned counsel for t he respondent company has relied on a decision of this Court, in India Trading C orporation vs. Commissioner of Income Tax, reported in (1995) 1 GLR 330. Ms. Haw elia has further relied on a decision of the Calcutta High Court in Assam Brook Ltd. vs. Commissioner of Income Tax, reported in 267 ITR 121, wherein the paymen t made to a club for renovation of the club was held to be in the interest of th e company and the same was held to be expenditure for the purpose of business al lowable under Section 37 of the Act. It is the further contention of Ms. Hawelia that the learned Tribunal, as a final fact finding authority, having come to a conclusion that the publicity expenses, incurred by the company, were for the pu rposes of business, the same is a finding of fact and no substantial question of law arises out of such an order. In support of her contention, learned counsel for the respondent company has relied on a decision of the Madras High Court in Commissioner of Income Tax vs. Balaji Enterprises, 236 ITR 587, wherein the lear ned Tribunal had held the payment made to the Karnataka Lawn Tennis Association to be expenses for assessee’s business and allowable under the Act. The High Cou rt held that no question of law arose from the order of the Tribunal. The decis ion of the Calcutta High Court, in Sarda Plywood Industries Ltd. vs. Commissione r of Income Tax, 238 ITR 354, has also been relied upon by Ms. Hawelia, in suppo rt of her submission that once it is found that the expenditure had, as a matter fact, been incurred by the assessee for the purpose of publicity and advertisem ent, it is not for the department to consider whether commercial expediency just ified the said expenditure or not. 16. Before deciding the issues, in question, we deem it apposite to have a l ook at the scope of Section 37 of the Act. Section 37 of the Act provides that a n expenditure to be covered by the ambit of Section 37 of the Act, the expenditu re should be wholly and exclusively for the purpose of business. The true test f or an expenditure, laid out wholly and exclusively for the purpose of business, is that it is incurred by the assessee as incidental to its trade for the purpos e of keeping its trade going on and that the expenditure must be incurred by the assessee as a trader and not in any other capacity. The word (cid:28)wholly (cid:29) refers to the quantum of expenditure and the word (cid:28)exclusively (cid:29) refers to the motive, obj ective and purpose of the expenditure. The expression (cid:28)wholly and exclusively (cid:29), appearing in Section 37, does not mean necessarily. It is important to note, i n this regard, that the word, (cid:28)necessarily (cid:29), found place in the Income Tax Bill, 1961, but it was dropped at the Legislative anvil. It may be noted here that Vi scount Cave L. C., in Atherton vs. British Insulated & Helsby Cables Ltd., (1925 ) 10 TC 155, 191(HL), observed (cid:28) & a sum of money expended, not of necessity an d with a view to direct and immediate benefit to the trade, but voluntarily and on the ground of commercial expediency and in order indirectly to facilitate the carrying on of the business, may yet be expended wholly and exclusively for the purpose of trade (cid:29). The same test was applied in Cooke vs. Quick Shoe Repair Ser vice, (1949) 30 Tax Case 460. 17. What necessarily follows from the above discussion is that when an expen diture is claimed to have been incurred by an assessee for promotion of his busi ness, there is no legal obligation imposed on the assessee to prove that the exp enditure was necessary for promotion of his business. So long as the expenditur e is incurred by an assessee for promotion of sale of product, the assessee is e ntitled, under Section 37(1) of the Act, to claim exemption from tax on such amo unt of expenditure. The tests, referred to above, were quoted in Eastern Investments Ltd. vs 18. . CIT, (1951) 20 ITR 1, 4 (SC), wherein the following principles were laid down: Though the question must be decided on the facts of each case, the final (a) conclusion is one of law; (b) It is not necessary to show that the expenditure was a profitable one or that any profit was, in fact, earned or not; (c) It is enough to show that the money was expended (cid:28)not of necessity and w ith a view to a direct and immediate benefit to the trade, but voluntarily and o n the ground of commercial expediency, and in order indirectly to facilitate the carrying out of the business (cid:29); Beyond that, no hard and fast rule can be laid down to explain what is m (d) eant by the word ’solely’ occurring in the pre- 1939 law. 19. In CIT vs. Malayalam Plantations Ltd., (1964) 53 ITR 140, the Supreme Co urt held that business expediency may not require that all the expenses be incur red for earning immediate profits. The Supreme Court also held that such expedie ncy may also require that expenses be incurred to save business from coercive pr ocess and unlawful expropriation so that business may remain on sound footing an d may earn better profits in future. An expenditure to which one cannot apply a n empirical or subjective standard is to be judged from the point of view of a b usinessman and it is relevant to consider how a businessman himself treats a par ticular item of expenditure, whether as revenue expenditure or as capital expend iture. It is by now well settled that while allowing expenditure for the purpose of deduction under Section 37 of the Act, the test is not what a prudent man wo uld do in similar circumstances. Though an assessee may be an imprudent business man, yet if he incurs expenditure voluntarily, for the purpose of his own busine ss, it would be allowable as a proper deduction. In Eastern Investment Ltd. vs. CIT, (1951) 20 ITR 1, the Supreme Court held that in order that deduction, under Section 37(1) of the Act, is allowed in respect of an expenditure, it need not have been incurred with the object of gaining a direct and immediate benefit; it would be, rather, sufficient even if it was incurred in order to indirectly fac ilitate the carrying on of the business. An expenditure, in order to be allowabl e under Section 37 of the Income Tax Act, must be incurred for commercial expedi ency. In CIT vs. Motor Industries Co. Ltd. (1997) 223 ITR 101, the Supreme Cour t held that what is to be seen is not whether it was or was not compulsory for t he assessee to make the payment, but the correct test is that of commercial expe diency. As long as the payment, which is made for the purposes of the business a nd not by way of penalty for infraction of any law, the same would be allowable as deduction. The commercial expediency of a businessman’s decision to incur an expenditure cannot be tested on the touchstone of strict legal liability to incu r such an expenditure. Such decisions have to be taken from a businessman’s poin t of view and have to be respected by the authorities even if it appears to the latter that the expenditure incurred was unnecessary and avoidable. As such, a b usinessman is the best judge to determine the business expediency and the fact a s to whether a particular expenditure is a revenue expenditure, incurred for the purpose of business, must be determined on consideration of all facts and circu mstances as well as by application of principles of commercial trading. The corr ect approach would be to see whether the payment, under consideration, was made on grounds of commercial expediency for ultimate benefit of business or not. For the allowability of an expenditure under Section 37 of the Act, it i 20. s not relevant as to whether the benefit, expected to be accrued out of an expen diture incurred, is to accrue immediately or after a lapse of time, whether dire ctly or indirectly. In CIT vs. Dhanrajgirji Raja Narasingirji (91 ITR 544), the Supreme Court held that it is not open to the department to prescribe what expe nditure an assessee should incur and in what circumstances he should incur the e xpenditure. Every businessman knows his business best. Section 37, nowhere, cas ts a duty on the assessee to give evidences as regards the exact making of the e xpenditure, which is a decision to be taken by the assessee. Evidence, which is required to be produced by the assessee, is as regards the incurring of expendi tures. The Assessing Officer must be satisfied that the expenditure claimed by t he assessee was, in fact, incurred by the assessee and the same was for the purp ose of business and, for that purpose, the Assessing Officer may direct the asse ssee to produce evidence in support of the same. However, to direct the assessee to adduce evidence in support of the purpose of expenditure or to give direct e vidence as to how such expenditure was incurred and/or to adduce evidence about the benefit accruing/to be accrued from such expenditure would amount to interfe ring in the business decision of the assesse, which is, in our considered view, not contemplated by Section 37 of the Income Tax Act. 21. Keeping in view the aforesaid legal principles, when we examine the fact s of the present case, we find that the learned Tribunal has given a specific fi nding that the respondent company (assessee) has submitted bills and vouchers in support of the Foreign Travel Expenditure. It is also an admitted fact that the respondent company is engaged in the business of export of tea and, in fact, du ring the relevant year, the export turnover of the respondent company was more t han Rs.100 crores. It is also an admitted fact that 70% of the company’s shares were held by the foreign residents and the respondent company regularly exporte d tea to European countries. The Foreign Directors of the respondent company vis ited India in order to attend Board meetings and monitoring business operations. Besides representatives and consultants of the respondent company, representati ves of holding company from U.K. also visited India for coordinating exports and monitoring functioning of the tea gardens. The garden managers visited U. K. an d Kenya for business purposes. Visits to U. K. were necessary as the respondent company exported its tea to London for sale in the European market. The garden m anagers visited UK also to meet foreign customers and selling agents to promote the respondent company’s exports. Visits to Kenya by the Directors/ Executives/M anagers were necessary, because the said country is the largest exporter of tea in the world. The respondent company had sent its senior garden Manager for cond ucting study on Kenyan tea manufacturers so that the respondent company survives in the international competition in tea export. Under such circumstances, the finding of the learned Income Tax Appellate Tribunal that the expenditure, on th e visits by the garden managers, was wholly and exclusively for business purpose s cannot be said to be suffering from any illegality and infirmity. Keeping in mind the rival submissions made before us, let us, now, rever 22. t to the fact that the Commissioner of Income Tax (Appeals) enhanced the disallo wance on the ground that the visits of the tea estate managers to foreign countr ies cannot be said to be for the purpose of business as the tea estate managers cannot be said to be responsible for exports. Moreover, the expenses, incurred in connection with the foreign travels of the spouses of tea estate managers, we re also held to be not for the purposes of business. The Commissioner of Income Tax (Appeals) held that the respondent company failed to prove the necessity of the wives of the tea estate managers travelling with their spouses and the expen diture incurred in connection therewith. Our attention is drawn, at this stage, to the contention of the learned counsel for the respondent company that the nec essity of the expenditure is not a subject matter of examination by the Assessin g Officer. As regards the question on the expenditure incurred in connection wit h the travels of the wives of the tea estate managers, we find force in the subm ission of Ms. Hawelia, learned Counsel for the respondent company, that since it is customary in the European countries for the wives to accompany their husband s, the travelling of the wives along with their husbands cannot be said to be pe rsonal visits of the wives, but such a visit has to be regarded as having been u ndertaken for the purpose of business of the respondent company. The Tribunal, as a fact finding authority, having come to the finding that the expenditure, on the visits by the representative of the company abroad and expenditure as well as the visits to India by the London based officials of the respondent company, in view of the respondent company’s substantial exposure to overseas trade and large holdings of the respondent company with foreign promoters, were business e xpenditures, is a finding of fact and the same cannot be interfered with in an a ppeal under Section 260A of the Act. 23. In view of the above, we do not find any infirmity in the order of the I ncome Tax Appellate Tribunal in deleting the disallowance of Rs. 28,90,655/- on account of Foreign Travel Expenses. In so far as the deletion of disallowance of Rs. 9,00,000/- on account o 24. f publicity expenses is concerned, the learned Tribunal, in its order, noted tha t the respondent company had paid Rs. 5,00,000/- to Bengal Club Ltd. for sponsor ing programmes and to fund infrastructural additions to celebrate the 175th year of the club. The respondent company further paid Rs. 3,00,000/- to Anand Bazar Patrika Ltd. for sponsoring the Centenary Celebrations of Cotton College at Guw ahati. The respondent company paid Rs. 2,00,000/- for sponsoring the State Level National Children Science Congress in Assam. The disallowance of Rs. 9,00,000/- was on the ground that the above mentioned expenditures were for non-business p urposes and it was, rather, in the nature of donation. 25. While considering the above aspect of the appeal, it needs to be borne i n mind that it was submitted, before the learned Tribunal, that the Managing Dir ector of the respondent company was a member of the Bengal Club and he had spent Rs. 5,00,000/- for sponsoring the programmes of the club. Sponsoring of a progr amme of the nature aforesaid, obviously, leads to advertisement and wider acknow ledgement of the respondent company and its products. Such an expenditure canno t but be regarded as having been incurred for the purpose of augmentation of inc ome of the respondent company. In short, the said sum of Rs. 5,00,000/- ought t o have been allowed as an expenditure incurred in the interest of the business o f the respondent company. The expenditure, incurred in connection with sponsori ng of the Centenary celebrations of Cotton College, at Guwahati, by Anand Bazar Patrika Ltd. and the sponsoring the State Level National Children Congress in As sam, were also allowable, because the respondent company’s banners, as sponsors of the events, were displayed at the said functions. Therefore, the said expendi tures were held by the Tribunal to be wholly and exclusively incurred in connect ion with business. While allowing the respondent company’s claim, the learned Tr ibunal relied on a decision of the Calcutta High Court, in Assam Brooke Ltd. (su pra), wherein a sum of Rs. 5,00,000/- was paid by the assessee to a club. The re levant portion of the observations, made by the Calcutta High Court, read as und er: (cid:28)If the management paid some amount for the upliftment/ running of the club in q uestion, then it must be held that the payment was made in the interest of the c ompany so that its employees remain happy and consequently the work of the compa ny was not hampered in any way due to dissatisfaction on the part of its employe es. As this payment of Rs. 5,00,000- was made by the company to the club keeping its business interest in mind, the payment must be held to be business expendit ure and accordingly as per section 37 of the Income Tax Act, the assessee compan y was entitled to get deduction, in respect of it. (cid:29) (Emphasis added) 26. In Additional Commissioner of Income Tax vs. Kuber Singh Bhagwandas, 118 ITR 379, while dealing with donation made voluntarily by an assessee with the o bject of obtaining permits of business, so as to enable the assessee to earn pro fits by export and selling of gram in the neighboring states, the Full Bench hel d that such donation were allowable under section 37(1) of the Act as the expend iture had been incurred wholly and exclusively for the purpose of assessee’s bus iness. In Indian Trading Corporation vs. Commissioner of Income Tax, (1995) 1 GL R 330, this Court has held that the payments, made to the Delhi Flying Club Ltd. , Delhi, and the AICC Souvenir Committee, on account of advertisement expenses w ere for the purposes of business. 27. In view of the above propositions of law, we are of the considered view that it is for the assessee (respondent company in the present case) to decide w here and in what manner publicity of its business is to be done and what benefit it will derive for its business by making such publicity. Consequently, we do n ot find any infirmity in the order of the Income Tax Appellate Tribunal, while d eleting the disallowance on account of publicity expenses. 28. rit in the present appeal. This appeal is, therefore, dismissed. 29. In the result and for the reasons discussed above, we do not find any me No order as to costs.