Travelling expenses of Director's wife

In Glaxo Laboratories (India) Ltd. v/s ITO (1986) 26 TTJ (Bom.) 214 (Special Bench) the Assessing Offer had disallowed certain travelling expenses on foreign tour of chairmen's wife, and therefore on appeal to the I.T.A.T., it was held that in the modern age, and mere so in western countries, the senior executives are, as a matter of social custom, accompanied by their wives when they visit, though for business purpose, it is an allowable expenditure as it is in the business interest.

This is because the personal contacts built up and strengthened which leads to cementing of business relationships and thus helps business.

Regards,

Keval.Shah

Many a time A.O shall only evaluate whether Directors visit is necessary and the accompayning is absolute necessary like ill health , prospects for business increases etc. in this case the visit is absolutely unreasobale which also does not derive any business interest , hence not allowable

A small query can reimbursement of medical expenses of director's wife are allowed if it is specifically mentioned in the appointment letter.