New Delhi: The Supreme Court has dismissed the Income-Tax department’s plea alleging that IT solutions provider Wipro Infotech can not claim deductions on foreign travel expenditures incurred on spouses of its employees deputed abroad.
The department had challenged the Karnataka High Court’s judgement that allowed Wipro to take the benefit of such deductions.
The high court had held that the company’s business would suffer if such expenditures were not allowed as the most competent employees might refuse to work abroad, if such comforts were not provided to them.
The apex court bench headed by Justice S H Kapadia last week dismissed the petition. Earlier, it had sought explanation from the IT major as to why it should not pay tax on travel expenditures incurred on spouses of its employees deputed abroad.
Opposing such deductions to Wipro, Additional Solicitor General Mohan Parasaran, appearing for the department, said the high court was not justified in holding in favour of Wipro as its employees were deputed abroad for over six months but such travel was of a personal nature and not professional.
“The high court and the Appellate Tribunal erred in basing their finding on human sympathy that the employees would be away from their spouses for a long period and, therefore, the presence of spouse was a necessity, the conclusion which was not based on any sound principle of law,” the petition stated.
Wipro had claimed deduction in respect of the amount spent by it on the air tickets for the travel of its employees’ spouses on the grounds that its employees were deputed for work abroad for over six months.
Such benefit was claimed by the assesses on the ground that such benefit extended to the spouses in connection with the business.
Both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal had held that the expenses incurred on such travel was to earn the income from abroad and, therefore, Wipro was entitled for deduction while computing such income for the purpose of other benefits under the Income Tax Act.