MANKAD J G Vs. COMMISSIONER OF INCOME TAX
LAWS(GJH)-1963-9-17
HIGH COURT OF GUJARAT
Decided on September 03,1963

J.G. MANKAD Appellant
VERSUS
COMMISSIONER OF INCOME TAX Respondents

JUDGEMENT

BHAGWATI, J. - (1.) THIS is a reference under s. 66(1) of the IT Act at the instance of the assessee. The assessee is a chartered accountant and he resides and carries on his profession of a chartered accountant in Ahmedabad. On 25th May, 1951, the post of a part-time professor of accountancy in M. J. College of Commerce, Bhavnagar, was advertised in the Saurashtra Government Gazette and in response to the advertisement, the assessee applied for the post. The assessee was selected for the post and by a notification dated 12th July, 1951, the assessee was appointed to the post on the terms and conditions contained in the notification, which was in the following terms : "Shri J. G. Mankad, B. Com., R. A., is appointed as part-time professor of accountancy, M. J. College of Commerce, Bhavnagar, on Rs. 400 per month (including travelling allowance and all other allowances) w.e.f. the date he takes over."
(2.) SINCE the assessee was residing and practising in Ahmedabad, he had to undertake journeys from Ahmedabad to Bhavnagar for giving lectures to students in the college and he used to go once a every week so as to be in Bhavnagar on Tuesday and Wednesday. During the year 1957-58, being the previous year for the asst. yr. 1958-59, the assessee incurred expenses amounting to Rs. 1,434 for travelling between Ahmedabad and Bhavnagar. This amount of Rs. 1,434 was claimed by the assessee either as an exemption under s. 4(3) (vi) or as a deduction under s. 7(2) (iii) in his assessment for the asst. yr. 1958-59. The claim was rejected by the Revenue authorities and hence the present reference. There were two grounds on which the assessee contented that the amount of Rs. 1,434 representing the expenses incurred by the assessee for travelling between Ahmedabad and Bhavnagar was liable to be excluded from his assessable income. The first ground was founded on s. 4(3) (vi) while for the second ground which was urged in the alternative was placed on s. 7(2) (iii). In our opinion, neither ground can avail the assessee and the claim made by the assessee for the exclusion of the amount of Rs. 1,434 from his assessable income must fail. We will first examine the ground based on s. 4(3) (vi). Sec. 4(3) (vi) exempts from inclusion in the total income of an assessee any special allowance or benefit, not being in the nature of an entertainment allowance or other perquisite within the meaning of s. 7(1), specifically granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit, to the extent to which such expenses are actually incurred for the purpose. It is clear from a plain reading of s. 4(3) (vi) that an assessee in order to claim the exemption granted by it must show that a special allowance or benefit, not being in the nature of an entertainment allowance or other perquisite within the meaning of s. 7(1), was specifically granted to meet expenses and that such expenses were wholly and necessarily incurred in the performance of the duties of an office or employment of profit, and if these conditions are shown to exist, the special allowance or benefit would be liable to be excluded from the assessable income to the extent to which such expenses are actually incurred for the purpose. Now it is difficult to see how the assessee in the present case can at all rely on s. 4(3) (vi). No special allowance or benefit was specifically granted to the assessee to meet the expenses of travelling from Ahmedabad to Bhavnagar and back. Mr. M. C. Nanavati, learned advocate appearing on behalf of the assessee, drew our attention to the notification appointing the assessee to the post of part-time professor of accountancy and contended that the salary of Rs. 400 which was given to the assessee included travelling allowances and all other allowances and that there was, therefore, a special allowance in the shape of travelling allowances which was specifically granted to the assessee to meet the expenses of travelling between Ahmedabad and Bhavnagar. Mr. M. C. Nanavati urged that the advertisement inviting applications for the post required that the applicant must be a practising chartered accountant and that the Government which appointed the assessee, therefore, knew that the assessee would be a practising chartered accountant. The Government also knew, argued Mr. M. C. Nanavati, that the assessee was practising as a chartered accountant in Ahmedabad and it was for that reason that it was stated that the salary of Rs. 400 would include travelling allowance and all other allowances. This contention of Mr. M. C. Nanavati has, in our opinion, no substance at all, for it is based on a misreading and misconstruction of the notification appointing the assessee to the post of part-time professor of accountancy. It is no doubt true that the notification appointing the assessee to the post stated that the salary would be Rs. 400 including travelling allowance and all other allowance, but all that this provision meant was that the salary was inclusive of all allowances including travelling allowance and that the assessee shall not be entitled to claim any separate travelling allowance or other allowance. No amount was indicated in the notification by way of travelling allowance or by way of any other allowance and by its very nature it could not be, for what was being given to the assessee was a salary of Rs. 400 per month and not any specific amount by way of travelling or other allowance. From this provision in the notification, it is difficult to conclude that any special allowance or benefit was granted to the assessee much less specifically granted to meet the expenses of travelling between Ahmedabad and Bhavnagar and on this ground alone the assessee must fail in his attempt to invoke the aid of s. 4(3) (vi).
(3.) BUT this is not the only difficulty in the way of the assessee. It is also not possible to say that the expenses which were incurred by the assessee for travelling between Ahmedabad and Bhavnagar were expenses wholly and necessarily incurred in the performance of the duties of the office or employment of profit held by the assessee. The assessee held the office of part-time professor of accountancy in M. J. College of Commerce at Bhavnagar and the duties of this office consisted of giving lectures to the students at the college. The duties commenced when the assessee started giving lectures to the students at the college and ended for the time being of the completion of the lectures. If the assessee had to incur expenses for travelling between Ahmedabad and Bhavnagar, that was because the assessee chose to live and practice his profession in Ahmedabad and he had to travel to Bhavnagar before he could begin to perform his duties as part-time professor of accountancy and having concluded those duties desired to return to his home in Ahmedabad. The expenses of travelling between Ahmedabad and Bhavnagar could not be said to be expenses incurred by the assessee in the course of performance of the duties of the office of part-time professor of accountancy. While travelling from Ahmedabad to Bhavnagar and back, the assessee was certainly not performing the duties of the office of part-time professor of accountancy. The expenses of travelling between Ahmedabad and Bhavnagar were incurred by the assessee partly before beginning to perform his duties as part- time professor of accountancy and partly after the conclusion of his duties as part-time professor of accountancy and such expenses could not, therefore, be said to have been incurred by him in the performance of the duties of the office of part-time professor of accountancy. In this view which we take, we are supported by the high authority of the decision of the House of Lords in Ricketts vs. Colquhoun (1925) 10 Tax Cases 118. In this case the assessee was a barrister residing and practising in London, and he held the Recordership of Portsmouth. He incurred certain expenses for travelling between London and Portsmouth in order to attend the Quater Sessions. These expenses were claimed by him as a deduction from the emoluments of his office as Recorder relying on r. 9 of Schedule E of the English Act. This rule was in the following terms : "If the holder of an office or employment of profit is necessarily obliged to incur and defray out of the emoluments thereof the expenses of travelling in the performance of the duties of the office or employment, or of keeping and maintaining a horse to enable him to perform the same, or otherwise to expend money wholly, exclusively and necessarily in the performance of the said duties, there may be deducted from the emoluments to be assessed the expenses so necessarily incurred and defrayed." ;


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