The Judgment of the Court was delivered by

Ratnam, J.:— An interesting question regarding the allowability of the expenditure incurred on the foreign tour of the wife of a senior partner in computing the income under the head “Profits and gains of business”, under s. 37(1) of the I.T Act, 1961 (hereinafter referred to as “the Act”), arises in this reference under s. 256(2) of the Act, at the instance of the Revenue. The assessee is a firm of five partners carrying on business in wholesale piece-goods and as exporter of handloom goods to foreign countries. For the assessment year 1972-73 (year ending March 31, 1972), before the ITO, the assessee claimed that the foreign tour expenses of the partner, Ahmed Hajee Mohamed, and his wife amounting to Rs. 46,224 are allowable under s. 37(1) of the Act under the head “Export promotion expenses”. The partner of the assessee, who undertook the foreign tour, was claimed to be a diabetic and it was, therefore, stated that it became necessary for his wife to accompany him for the purpose of attending on him. Though supporting medical certificates were also produced before the ITO, he disallowed the assessee's claim to the extent of Rs. 20,534 representing the amounts spent towards the air ticket of the partner's wife (Rs. 12,258), expenses attributed to her (Rs. 7,276) and the estimated personal expenses of the partner (Rs. 1,000). On appeal by the assessee, the AAC found, relying upon the correspondence between the assessee and the Reserve Bank of India relating to the release of foreign exchange as well as the medical certificates and recognising what was styled as a modern trend in commercial and business organisations requiring the wives of the top executives to accompany their husbands on foreign trips, that the expenses incurred in connection with the trip of the wife of the partner of the assessee were wholly and exclusively incurred for business purposes. In addition, the AAC also found that the wife of the partner of the assessee was trained in modern designs, which helped the growth of the business of the assessee and that considering the export sales of the assessee, the expenses incurred by the assessee in connection with the foreign tour of the wife of the partner cannot be considered to be unreasonable. The adding back of a sum of Rs. 1,000 as personal expenses of the partner of the assessee was also held to be unsustainable, as no personal element, according to the AAC, could have entered the foreign tour expenses of the partner of the assessee. In this view, the AAC directed the ITO to allow the entire expenses incurred for the partner of the assessee and his wife, as claimed, in the computation of the income of the assessee for the assessment year 1972-73. Not satisfied with this, the Revenue appealed to the Tribunal and the Tribunal felt that the need for the partner of the assessee to maintain efficiency and fitness to make the tour effective and purposeful assumed importance and in that context, the role played by the wife of the partner, who was also on tour as a “nurse”, would be as much a business purpose, as the tour itself and further that the foreign tour of the partner of the assessee with his wife had been a successful one in that its export sales had gone up as a result of the tour. The expenditure relating to the foreign tour of the wife of the partner of the assessee was, therefore, held to be wholly and exclusively for the purpose of the business of the assessee. The adding back of Rs. 1,000 as personal expenses of the partner was also held to be not justified. In the result, the order of the AAC was upheld and the appeal preferred by the Revenue was dismissed.

2. Aggrieved by this, the Revenue has come up before us on a reference under s. 256(2) of the Act, on the following two questions of law:

“1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the expenditure incurred by the assessee-firm on the foreign tour of the wife of the senior partner was wholly and exclusively for the purposes of business of the assessee-firm and, therefore, the same was an allowable expenditure under s. 37 of the Income-tax Act, 1961?

2. Whether the finding of the Appellate Tribunal is based on valid and proper materials and is a reasonable view to take on the facts and in the circumstances of the case?”

3. In support of this reference, the learned counsel for the Revenue first contended that the expenses incurred by the assessee, in connection with the foreign tour of the wife of the senior partner of the assessee, would partake the character of personal expenses and do not qualify for allowance under s. 37(1) of the Act. Referring to the medical certificates, the learned counsel for the Revenue pointed out that they at best indicated that the partner of the assessee was in need of attention owing to his being afflicted by diabetes, but that would not render the expenses incurred in that connection any the less personal. Strong reliance in this connection was placed by the learned counsel for the Revenue upon the decision of the Supreme Court in State of Madras v. Coelho [1964] 53 ITR 186, and that of the Gujarat High Court in Bombay Mineral Supply Co. P. Ltd. v. Commissioner Of Income-Tax. (judgment in Income-tax Reference No. 56 of 1974, dated October 9, 1975 —[1985] 153 ITR 437 (infra). On the other hand, the learned counsel for the assessee submitted that the expenses incurred on the wife, who accompanied her husband, the partner, on his foreign tour cannot be characterised as personal, as the expenditure had been incurred for her, while the partner on tour, was on a business tour. It was also submitted that though such expenses might appear at first blush to be personal, yet the main or predominant purpose of incurring the expenditure was for business and even if there was a personal element in the expenditure so incurred, that would only be incidental and would not render the expenses a personal one.

4. We may immediately state that the second aspect of the aforesaid submission of the learned counsel for the assessee forms part of a more elaborate second argument of the learned counsel for the Revenue and we, therefore, propose to deal with that aspect later in the course of the judgment while considering the second argument on behalf of the Revenue.

5. Before proceeding to embark upon a consideration of the submission relating to the personal nature of the expenditure, it would be necessary to refer to s. 37(1) of the Act, which runs as follows:

“Any expenditure (not being expenditure of the nature described in sections 30 to 36 and section 80VV and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head. Profits and gains of business or profession.’”

6. The rest of the section need not be noticed, as it is unnecessary. There is no dispute that Ahmed Hajee Mohamed, a partner of the assessee, who undertook the foreign tour, is a diabetic. He has been certified to be so by his physician as well as the Director of Medical Education. The certificate issued by his physician refers to his taking insulin injections and his requiring the attention of an attendant in the event of an untoward reaction. To similar effect is the certificate issued by the Director of Medical Education, which stated that he required the attention of an attendant. In the letter dated April 24, 1971, addressed by Ahmed Hajee Mohamed to the Director of Medical Education, requesting the issue of a certificate to the effect that he is a diabetic, he has also set out that he needs the help and assistance of his wife to attend on him. Thus, from the certificates made available by the consulting physician, the Director of Medical Educa-tion and the statement made by Ahmed Hajee Mohamed, it is seen that he is a person who suffers from diabetes and is under insulin treatment and also requires the help and assistance of an attendant. The need for such assistance of an attendant has arisen on account of the state of health of Ahmed Hajee Mohamed. He has all our sympathy. May be that Ahmed Hajee Mohamed is a diabetic and a good businessman, but diabetes is personal to him and has nothing to do with business. It is not diabetes that has made him a good businessman. The state of health of a person is not in any way related to the business activities carried on by him. A good businessman may be bad in health and a good and healthy person may be no good at all in business. Therefore, the state of health has no relevance or bearing at all to the business activities carried on by a person. If a businessman, not in good health, desires to secure the help and assistance of an attendant, then, it is purely to satisfy his personal need. Such a need is not very different from say, his need for food and clothing, except that this need is directed towards the maintenance of his health. The expenses incurred for availing of the services of an attendant would, in our view, be only to satisfy or meet the personal need and in that context, it is really immaterial whether the person concerned avails himself of the services of his wife or that of a stranger. In this case, if the partner of the assessee had not been accompanied by his wife on the tour, having regard to his state of health, he would have been obliged to engage the services of probably a professionally trained nurse and, even in such a case, the expenses would have been purely personal. While we agree that a businessman in indifferent health ought not to be discouraged from undertaking a foreign tour accompanied either by his wife or nurse or other attendant, we cannot at the same time hold that expenses incurred either for availing himself of the company of his wife or the services of a nurse or attendant are any the less personal, however much the expenses are either necessary or even otherwise productive of good health or other enjoyable results from the point of view of the personal need and requirement of such a businessman. The two decisions relied on by the learned counsel for the Revenue are apposite. State of Madras v. Coelho [1964] 53 ITR 186 (SC), dealt with the interpretation of s. 5(e) of the Madras Plantations Agricultural Income-tax Act, 1955, which provided for deduction of certain items in the computation of taxable agricultural income and one such item was that any expenditure incurred in the previous year (not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of plantation. An estate was purchased by the assessee for which purpose he resorted to substantial borrowings. In the course of the assessment proceedings, the assessee claimed that the interest paid on the borrowings for the purchase of the estate should be deducted in the computation of the agricultural income. The amount so claimed was Rs. 22,628-9-8, out of which the Agricultural Income-tax Officer allowed only Rs. 1,570-10-7 and this was upheld by the AAC. The Tribunal, however, found that the borrowing was used by the assessee for the acquisition of the estate, but the proximate connection of the payment of interest was to a personal loan taken by the assessee and not with the plantation and in that view, disallowed the claim of the assessee. On further revision to the High Court, the claim of the assessee was held to fall within the scope of s. 5(e) and the entire claim for deduction on account of payment of interest was allowed. On appeal by the State, before the Supreme Court, it was argued that the payment of interest made by the assessee was a personal expense. Repelling that argument, the Supreme Court pointed out that personal expenses would include expenses on the person of the assessee or to satisfy his personal needs, such as clothing, food, etc., or for purposes not related to the business for which the deduction is claimed. Earlier, as we have pointed out, the expenditure in this case was incurred in order to satisfy and fulfil the personal need of the partner who had undertaken the foreign tour with a view to control his diabetes and maintain good health as a living human being and that was not in any manner related to the business in respect of which the deduction had been claimed. Almost in similar circumstances, the Gujarat High Court in Bombay Mineral Supply Co. P. Ltd. v. Commissioner Of Income-Tax. (judgment in Income-tax Reference No. 56 of 1974 dated October 9, 1975—[1985] 153 ITR 437 (infra)), had occasion to consider this question, though with reference to a private limited company, the assessee in that case. The managing director had undertaken a business tour of Japan and as he was in indifferent health, his wife accompanied him to look after him. One-half of the expenditure incurred on the tour was disallowed by the ITO and that was referable to the expenditure incurred for the wife of the managing director. The AAC, however, allowed the expenditure, but the Tribunal agreed with the view taken by the ITO that the expenditure could not be said to have been incurred towards or for the business of the assessee-company. On a reference by the assessee, it was argued that the services of the wife of the managing director was necessary during the foreign tour in view of the indifferent health of the managing director and the expenses incurred for her should be allowed as a business expenditure. Relying upon the observation of the Supreme Court in State of Madras v. Coelho [1964] 53 ITR 186 at 192, this argument was repelled and it was held that the need of the managing director of the assessee-company to have the services of his wife, who was not a qualified or trained nurse, either to attend on him for his indifferent health or to prepare food for him, would not entitle the assessee-company to claim the proportionate expenses as business expenses. In this case also, it does not appear that the wife of the partner of the assessee, who undertook the foreign tour with the partner of the assessee, was qualified or trained as a nurse or even if she was, it would not have made any difference to the claim for deduction made by the assessee, for, the wife of the partner who accompanied her husband on a foreign tour did so only with a view to look after him so that he may not be deprived of the company of the wife while on such foreign tour, which she would have done, even otherwise, if he had stayed at home. In doing so, there was no rendering of any service by the wife to the business. It also does not appear that the wife was requested or authorised by the assessee to accompany her husband on his foreign tour and this is also not without significance considering that she is the wife of the partner who went on the foreign tour. At best, it can be said that the wife of the partner, who accompanied him on the foreign tour, continued to fulfil her role and discharge her duties as a housewife, even while her husband was on tour and that certainly could not have had any value as such, especially when she did not devote her time and attention to the business as such. In this, there is only the satisfaction or fulfilment of the personal need of the partner to have his wife with him to attend on him and no more and by no stretch of imagination, the expenditure incurred in that connection can be said to relate to business. We are, therefore, of the view that the expenditure incurred was in the nature of personal expenses only.

7. The learned counsel for the Revenue next submitted that even assuming that the expenditure incurred related to business purposes, such expenditure was not laid out or expended wholly and exclusively for the purpose of the business. In other words, the argument is that the expenditure was laid out for a dual purpose, namely, to satisfy the personal needs as well as for purposes of business and not solely and exclusively for business purposes and that would take it out of s. 37(1) of the Act. However, the learned counsel for the assessee maintains reiterating the second aspect of his first contention that the predominant or the main purpose of the expenditure was for purposes of business and in that sense, the expenditure had been wholly and exclusively laid out for business purposes and not personal and, therefore, the Tribunal was right in the view it took. Reliance, in this connection, was placed by the learned counsel on both sides upon a large number of decisions, to which we shall make a reference later in the course of this judgment.

8. Section 37(1) of the Act provides for the allowance of any expenditure laid out or expended wholly and exclusively for the purpose of the business or profession in the computation of the income charge able under the head “Profits and gains of business or profession.” The expression “wholly” has been used with reference to the quantum, while the expression “exclusively” refers to the nature or the purpose of the activity in which the expenditure is incurred. In other words, the whole of the expenditure must have been solely and exclusively incurred for business purposes, in order to qualify for allowance under s. 37(1) of the Act. If there is a dual purpose, then, it is obvious that the expenditure would not qualify for allowance, for, it will cease to be wholly and exclusively laid out for business purposes. In this case, the partner of the assessee is a diabetic and requires to be looked after. The expenditure incurred is thus laid out in part for the advantage, benefit and well being of the partner of the assessee and it is distinct and different from the amount expended for purposes of business or trade. Even according to the claim made by the assessee, the expenditure is a business expenditure wholly and exclusively. However, part of the expenses at least, referable to the expenditure incurred on the wife of the partner, have not been wholly and exclusively laid out for the purpose of business, but for the maintenance of the health, the comforts and for the benefit of the partner as a human being. Therefore, this would at best be a case of expenditure for the maintenance of the health of the partner of the assessee and for the purpose of the business of the assessee. The attention given by the wife of the partner of the assessee, while on tour, would enure to his benefit and advantage, not only when he was engaged in his business activities, but even otherwise as a human being, so that at least in part, the expenditure incurred had been laid out for the advantage and benefit of the partner. The expenditure incurred thus served not only purposes of business but also a personal or a private purpose and if the expenditure does not exclusively serve the purposes of business, then, it does not qualify for allowance under s. 37(1) of the Act. Viewed thus, the expenditure in: this case had a twin purpose and did not qualify for allowance.

9. We are supported in the above view of ours by the several decisions to which our attention was drawn. Norman v. Golder (Inspector of Taxes) [1944] 26 TC 293; [1945] 13 ITR (Suppl) 21 (CA), is one such decision. There, while working as a professional shorthand writer in the Royal Courts of Justice, owing to the condition of courts, Norman contracted an illness, which necessitated medical care and his absence from work. A claim was made that the expenses incurred were permissible deductions under rule 3 of the Rules applicable to Cases I and II of Schedule D prohibiting disbursements or expenses not being money wholly and exclusively laid out or expended for the purposes of the trade, profession, employment or vocation. Rejecting the claim, Lord Greene M.R pointed out that it is true that if a person does not get well by incurring expenses by way of doctor's bills, etc., he cannot carry on trade or profession and if he cannot carry on trade or profession, he cannot earn and if he cannot earn income, the Revenue will not get any tax; but the same thing would not apply to the food and clothings that a person wears and expenses of that kind are not wholly and exclusively laid out for the purposes of trade, profession or vocation, but laid in part for the advantage of the taxpayer as living human being and, therefore, doctor's bills are excluded as expenses relatable to maintenance of the party, his family, distinct from purposes of profession or trade. Bowden v. Russell & Russell [1965] 42 TC 301 (Ch D) had to consider the claim for deduction of the expenses incurred by the sole partner of a firm of solicitors in attending the annual meeting of the American Bar Association, a professional body along with his wife. It was contended for the taxpayer that the expenses incurred should be deducted as the visit was necessary to maintain the firm's efficiency to secure new clients as well as to improve its organisation and the Crown objected to this on the ground that the purpose of the visit was not exclusively to attend the conference, but included holiday and social purposes as well. Pennycuick J. referred to the evidence of the solicitor and found therefrom that the expenses of the American visit by the solicitor were incurred for a dual purpose, namely, the advancement of his profession and the enjoyment of a holiday (a distinct purpose other than carrying on business) and, therefore, the expenses incurred cannot be held to be wholly and exclusively laid out for the purpose of profession. Murgatroyd v. Evans-Jackson [1966] 43 TC 581 (Ch D), dealt with a claim for allowance as a business expense the expenditure incurred by a professional trade mark agent who was advised to have treatment in hospital. He had entered a nursing home which commanded all the facilities for carrying on business activities and there he held conferences with his clients, met members of his staff and also dealt with the correspondence. He made a claim that 60 per cent, of his total expenses at the nursing home should be allowed as a business expenditure in respect of the use of the room as an office. The Crown opposed this on the ground that the expenditure, apart from the telephone charges, was not wholly and exclusively incurred for the purpose of his profession as a trade mark agent or alternatively was incurred for his maintenance or other private purposes and as the expenditure had dual purposes, it could not be apportioned and merited disallowance in full. The General Commissioners, however, upheld the claim made by the trade mark agent, but Plowman J. disagreed with that and found that the object of going into the nursing home was to receive treatment for the illness and it would be opposed to common sense to say that his motive. in going into the nursing home was not to receive treatment for the injury, which would enure to his benefit, not only when he was carrying on his business, but also as stated by Lord Greene M.R, in Norman v. Golder, [1944] 26 TC 293, as a “living human being” and, therefore, the deduction is prohibited under clause (a) of s. 137 of Ramkishan Sunderlal v. Commissioner Of Income-Tax, U.P [1951] 19 ITR 324 (All), dealt with the allowability of an expenditure of Rs. 500 spent on boarding and lodging of partners in the course of their tours undertaken by them for business purposes under s. 10(2)(xii) of the Indian I.T Act, 1922. It was pointed out that boarding and lodging expenses of a partner cannot be said to be wholly and exclusively for the purpose of such business, for, such expenditure had to be incurred, though it may be that a partner going on tours may have to spend more oh his boarding; but he may have to spend something even if he had remained at the ‘headquarters and such an expenditure had to be incurred at least for preservation of life and, therefore, the money cannot be said to have been wholly and exclusively laid out or expended for business purposes. Prince v. Mapp (Inspector of Taxes) [1970] 1 WLR 260; [1971] 79 ITR 671 (Ch D), considered a claim for deduction by the taxpayer, a draughtsman, who was also a part-time professional guitarist, of the cost of an operation undergone by him, while computing the profits of his profession as a dance musician. Following an accident to his finger, an operation was performed to restore the flexibility necessary to play the guitar with his former skill, which he would not have undergone, had he not wished to continue to play the guitar. The Special Commissioners stated that the cost of the operation was excluded under s. 137(a) and (b) of the I.T Act, 1952, as the operation was to enable him to continue to play guitar not solely as a profession, but also as a hobby and that the cost had not, therefore, been incurred wholly and exclusively for the purposes of his profession, but for a dual purpose. On appeal, Pennycuick J., considering the finding rendered by the Commissioners, ruled that the expenditure was incurred to enable the taxpayer to continue to play the guitar and also enjoy and practise his hobby of playing that instrument and there was material on which the Special Commissioners could reach the conclusion that there was a dual purpose and, therefore, paragraph (a) of s. 137 of the I.T Act, 1952, was applicable. Seshasayee Brothers Ltd. v. Commissioner Of Income-Tax, Madras. [1961] 42 ITR 568 (Mad), dealt with a case of the allowability of the expenditure incurred in connection with the tour of a director to attend a conference, under s. 10(2)(xv) of the Indian I.T Act, 1922. In this judgment, though there is no pointed reference to the duality of the purpose of the expenditure as justifying the disallowance of a claim for expenditure, yet it appears to indicate that if it is partly for pleasure and partly for business or wholly for pleasure, in either event, the disallowance could be upheld. Commissioner Of Income-Tax v. Deccan Sugar & Abkhari Co. Ltd. [1976] 104 ITR 458 (Mad), related to the claim for deduction made by a company as an expenditure under s. 10(2)(xv) of the Indian I.T Act, 1922, a payment made to the auditors of the company to meet the expenses required to defend certain disciplinary proceedings brought against the auditors at the instance of one of the shareholders. The departmental authorities negatived the claim, but the Tribunal upheld it and on a further reference to this court, it was held that the disciplinary proceedings initiated against the auditors of the company was personal to the auditors and did not have the effect of affecting the company's interest in any manner and the expenditure cannot be considered to have been incurred by the company in connection with the carrying on of its business and cannot, therefore, be considered as having been laid out or expended wholty and exclusively for business purposes of the company. This decision does not throw any light upon the duality of the purpose as such, but proceeds on the footing that the expenditure was incurred not for purposes of carrying on business of the company and, therefore, not eligible for an allowance under s. 10(2)(xv) of the Act. In Modi Industries Ltd. v. Commissioner Of Income-Tax, U.P [1977] 110 ITR 855 (All), one of the questions that arose was, whether an expenditure of Rs. 32,477 incurred by the chairman of the company as travelling expenses for a tour along with his wife could be claimed as a deduction under s. 37 of the Act. The departmental authorities negatived that claim, but the Tribunal gave partial relief and on a reference, the Allahabad High Court held that the finding was to the effect that though the chairman was allowed to take his wife, it was not justified by any legitimate business needs and there was no finding that the wife rendered any service in connection with the business of the assessee and, therefore, the expenses incurred on the wife were not allowable as business expenditure. In Bentleys, Stokes & Lowless v. Beeson (H.M Inspector of Taxes) [1952] 33 TC 491, the Court of Appeal considered the question whether the appellant-solicitor firm, which had incurred expenses in entertaining clients, was entitled to a deduction of those expenses on the ground that they were incurred for the purpose of earning profits and were money wholly and exclusively laid out for the purpose of profession within rule 3(a) of the Rules applicable to Cases I and II of Schedule D to the I.T Act, 1918. Romer L.J observed at page 504 as under:

“If the activity be undertaken with the object both of promoting business and also with some other purpose, for example, with the object of indulging an independent wish of entertaining a friend or stranger or of supporting a charitable or benevolent object, then the paragraph is not satisfied though in the mind of the actor the business motive may predominate. For the statute so prescribes. Per contra, if in truth the sole object is business promotion, the expenditure is not disqualified because the nature of the activity necessarily involves some other result, or the attainment or furtherance of some other objective, since the latter result or objective is necessarily inherent in the Act.”

10. Viewed in the light of the aforesaid principle also, the object of the partner in taking, his wife with him on the foreign tour, on the facts of this case, was not exclusively for the purpose of the promotion of the business, but also with the object of securing the company of the wife in order that she may be in a position to attend on him during the course of his tour and even if the business motive was predominant, yet the expenditure does not qualify for the allowance. This is not a case where the sole object of the foreign tour undertaken by the wife of the partner of the assessee was business promotion and that had furthered or resulted in the maintenance or promotion of the health of the partner as an objective inherent in the act of undertaking the tour. The expenditure would not qualify for the allowance. This furnishes the answer to the contention of the assessee referred to earlier. Maclean (Inspector of Taxes) v. Trembath [1956] 1 WLR 437; [1957] 31 ITR 364 (Ch D), dealt with a case of husband and wife, who were the sole directors of a private limited company, who went on a tour to Australia to study refrigeration methods. The company did not resolve that the wife should go to Australia. The Special Commissioners found that the expenses of the taxpayer and his wife for their travel to Australia were wholly and exclusively and necessarily in the performance of their duties while holding office as directors. But, on appeal by: the Crown contending that the expenses incurred on the wife could not be deducted, Roxburgh J. held that there is no rule that merely because the expenses incurred by the husband are allowable, the wife's expenses also should be allowed and that the only asset of the wife was that she was a good conversationalist, but that could not have had any value at all, when she did not attend the business premises and though there was a business element in her visit, it was not wholly and exclusively for the company's business purposes and, therefore, her travel expenses could not be claimed as a deduction. This decision also illustrates that the expenses incurred in connection with the travel of the wife of a company director, who does not attend to the business of the company on such tour, cannot be stated to be wholly and exclusively laid out for business purposes to be eligible for the allowance under s. 37(1) of the Act. The duality concept recently came to be elaborately considered in Mallalieu v. Drummond (Inspector of Taxes) [1983] 3 WLR 409. A practising lady barrister, with a view to conform to the guidelines on dress in court, incurred expenses in the replacement and cleaning of clothing, which she wore in court and in chambers and claimed a deduction of those expenses in the computation of the profits of her profession, for assessment to income-tax. The items of clothing were such as could be worn in everyday life. The deduction was disallowed by the Inspector of Taxes and on appeal, it was found that the taxpayer had an ample private wardrobe, that she would not have bought the disputed items but for the requirements of her profession and that the preservation of warmth and decency was not a consideration which crossed her mind when she bought them. However, the General Commissioners found that the expenditure was incurred for a dual purpose, namely, to enable her to earn profits in her profession and to enable her to be properly clothed during the time she was engaged in her professional activity. On further appeal, the Commissioners' decision was reversed and a further appeal by the Crown was also dismissed by the Court of Appeal. However, the House of Lords held that in order to ascertain whether an item of expenditure was incurred exclusively for the purpose of the taxpayer's profession, the Commissioners had to look into the taxpayer's mind at the moment of expenditure in order to discover her object in making it, but that in doing so, they were not confined to the narrow approach of regarding the taxpayer's conscious motive at the relevant moment as being conclusive of her object; that conscious motive, although of vital significance, was not inevitably the only object which the Commissioners were entitled to find to exist and, therefore, they were entitled to conclude that, although the taxpayer's conscious object was to serve her professional purposes, another object, albeit an unconscious one, was that of providing herself with the clothing which she needed as a human being; and that, accordingly, the expense was not a deductible expense under s. 130(a) of the Income and Corporation Taxes Act, 1970. Even applying this test, the object of the partner of the assessee at the time when he took his wife along with him on his foreign tour was only to serve or assist him and not for any business purposes, albeit there was also another object, namely, the furtherance or the promotion of the business of the assessee by the partner taking his wife along with him. Even in such a case, it would only be a dual purpose in respect of which the expenditure had been incurred. On a consideration of the principles laid down in the aforesaid decisions, it is difficult to support the conclusion that the expenditure in question was wholly and exclusively laid out for business purposes and we are totally unable to share the view of the Tribunal in this regard.

11. There yet remains the second question referred to us. In the course of the order of the AAC, it is stated that the wife of the partner of the assessee is trained in modern designs and that helped the growth of the business of the assegsge and the export sales of the assessee rose to 21-85 lakhs of rupees and as a result of the foreign tour, the assessee became the third largest exporter of cotton handloom garments. What is urged by the learned counsel for the Revenue is that this statement of the AAC, endorsed by the Tribunal, is not based on any evidence, but proceeds totally on the imagination of the authorities by importing facts as well as circumstances not apparent on the record. In such a case, it was pointed out by the learned counsel for the Revenue relying upon CIT v. Jain [1973] 87 ITR 370 (SC) that any finding so rendered is not binding and would justify interference by the High Court, even in dealing with a reference under s. 256 of the Act. It was also further pointed out by the learned counsel for the Revenue that even if, as a result of the incurring of expenditure, there had been some indirect advantage to the assessee, that would not suffice to permit the expenditure as an allowable expenditure under s. 37(1) of the Act. Attention was also drawn by the learned counsel for the Revenue in this connection to the passage in Hals-bury's Laws of England, fourth edition, volume 23, paragraph 305, at page 212.

12. We find from paragraph 4 of the order of the AAC that it is stated therein that the wife of the partner, who went on a foreign tour accompanying him, is trained in modern designs which would help to develop the business of the assessee and that there was a steep rise in the export sales of the assessee as a result of the foreign tour undertaken by the partner of the assessee which became the third largest exporter of cotton handloom garments. We have searched the paper book in vain to find the materials in support of the statement made by the AAC. Similarly, in paragraph 5 of the order of the Tribunal, a reference has been made to the statement of the AAC in the course of his order and the Tribunal further proceeds to state that it is not the case of the Revenue that this finding is incorrect. We may immediately point out that there was no material on the basis of which the AAC could have made the statement and come to the conclusion he did. The Tribunal has merely put its rubber stamp on it, as it were, without ascertaining whether there was any basis or material in support of the statement of the AAC or the conclusion arrived at by him. Without doing so, the Tribunal has recorded a finding to the effect that the foreign tour of the partner of the assessee in the company of his wife had been successful and that had also helped the growth of the business of the assessee and had pushed up its export sales considerably. We are unable to find any materials in support of this conclusion arrived at by the Tribunal in paragraph 5 of its order. The Supreme Court has pointed out in CIT v. Jain [1973] 87 ITR 370, that the High Court and the Supreme Court have always the jurisdiction to interfere with the findings of the Appellate Tribunal, if it appears that either the Tribunal has misunderstood the statutory language, because the proper construction of the statutory language is a matter of law, or it has arrived at a finding based on no evidence or where the finding is inconsistent with the evidence or contradictory of it, or it has acted on material partly relevant and partly irrelevant or where the Tribunal draws upon its own imagination and imports facts and circumstances not apparent from the record or bases its conclusions on mere conjectures or surmises or where no person judicially acting and properly instructed as to the relevant law could have come to the determination reached. In all such cases, the findings arrived at are vitiated. In this case, as pointed out earlier, we find that the Tribunal had made the statements and also arrived at the conclusions or findings based oh no evidence and had freely drawn upon its imagination and imported facts and circumstances not apparent from the record with a view to support the claim made by the assessee for the allowance of the expenditure incurred in connection with the foreign tour of the wife of the partner of the assessee as an allowable item under s. 37(1) of the Act. The finding recorded by the Tribunal that the wife of the partner of the assessee is one who had been trained in modern designs and that it helped the growth of the assessee's business and had also boosted up the export sales of the assessee and in that sense, the foreign tour had been a successful one justifying the allowance of the deduction claimed by the assessee is, therefore, not sustainable as it is not based on evidence, but rests only on the imagination and importation of facts and circumstances, not apparent on the record. In the absence of materials, the Tribunal, judicially acting and properly instructed in income-tax law, certainly could not have come to the conclusion it did and under those circumstances, the findings of the Tribunal cannot be accepted.

13. Besides, there is another error in the reasoning of the Tribunal in that it seems to take the view that the foreign tour of the wife of the partner of the assessee had been productive of increased business for the assessee. We have earlier pointed out how there was no business activity at all carried on by the wife of the partner of the assessee, while she was on a tour with her husband. It is in this connection that the passage upon which reliance was placed by the learned counsel for the Revenue in Halsbury's Laws of England, fourth edition, volume 23, paragraph 305, at page 212, becomes relevant and that passage is to the following effect:

“Counter and indirect advantage are usually too remote to permit of the deduction of an expense connected with such advantages, and money so expended is not wholly and exclusively laid out or expended for the purpose of the trade.”

14. We have already pointed out how the expenses had no connection whatever with the business, as they were personal expenses, or in any case, the expenses had been incurred for a dual purpose and, therefore, do not qualify for an allowance under s. 37(1) of the Act. That section does not permit such an allowance from the point of view of the indirect advantages that may be secured as a result of the expenditure. Indeed, the section is totally silent with reference to the advantages secured as a result of the expenditure. Therefore, in the absence of materials with reference to the securing of advantages, it cannot be presumed that such advantages resulted to the assessee in its business activities as a result of the foreign tour undertaken by the wife of the partner of the assessee and that would justify the allowance of the expenditure as one appropriately falling under s. 37(1) of the Act. In view of the foregoing, we answer the questions referred to us in the negative and in favour of the Revenue. The assessee will pay the costs of this reference to the Department. Counsel's fee Rs. 500.