Expenses not directly related to business purposes should not be allowed.

1. The following questions are referred for the opinion of this Court:

1. Whether, on the facts and circumstances of the case the Tribunal was right in holding that the garden building and the furniture thereon were modes of advertisement to the assessee-company and the assessee was entitled to depreciation thereon?

2. Whether the learned Tribunal was right in law in holding the expenditure incurred on maintenance of gardens and depreciation on garden building, furniture and other accessories as deductible expenditure under Section 37 nw Sections 28 and 32 of IT Act, 1961 ?“

2. The relevant assessment year is 1971-72. The assessee has declared income of Rs. 25,05,550. During the course of assessment, the AO has noticed that assessee has claimed expenses on account of garden maintenance at Delhi, Jaipur and Sawaimadhopur. After considering the submissions, the AO was of the view that the expenses are not wholly and exclusively for the purpose of business so far the garden maintenance at Sawaimadhopur and Jaipur is concerned and the expenses incurred on garden maintenance at Delhi, that has nothing to do with the business of the assessee. The relevant observations of the AO in para 30 read as under

“An amount of Rs. 3,82,343 has been debited on maintenance of gardens/office lawns in the asst. yr. 197 1-72. The gardens are maintained at Sawaimadhopur, Jaipur and Delhi. The position of each of the gardens is discussed as under

.(a) At Sawaimadhopur, total expenditure during this year is Rs. 47,650 as against Rs. 46,209 last year. The assessee-company is having a cement factory and also offices and quarters of officers. The company has maintained lawns, rose gardens. It is stated that the employees and their dependants visit the said gardens. However, it has been noticed that the expenses are not fully for the employees. The assessee maintains a guest-house at Sawaimadhopur and some of the expenses of the maintenance of lawns and gardens are also for the residence of the officers. In one case of purchase made from MIs Jai Agro Industries Ltd. for Rs. 1,535 the bill has been debited to the Sawaimadhopur account but the date of supply has not been mentioned in the bill. It is not clear as to when the goods were received and where the goods were put to use. Whether there is any register for the seeds and plants being maintained is not clear because no such register has been produced before me. Looking to these facts, I think, out of the expenses of Rs. 47,650 an amount of Rs. 20,000 should be disallowed.

.(b) An amount of Rs. 50,727 has been claimed for gardening expenses at Jaipur office. It was given in writing that the assessee has a liaison office at Jaipur. The employees of other offices visit Jaipur very often. The lawns maintained are around the office building and has garden of rose and other flowers. Office lawns are used by Rajasthan Chamber of Commerce & Industry for holding seminars and parties, etc. On this ground the amount is claimed to be allowable.

I have gathered that the assessee’s building at Jaipur has office of its own and also of :

.(1) R.K. Hotels

.(2) Jai Agro Industries Ltd.

. (3) Mukul Trading Co. (P) Ltd. for some time

.(4) Sahu Minerals & Properties Ltd.

.(5) Alok Udyog Services Ltd.

The record regarding the receipt of seeds, plants, etc. and their despatches are not known because no such register has been produced before me. The assessee has a guest-house at Jaipur also and the expenses on the maintenance of lawns and gardens at guest-house has also been charged to the gardening expenses. The Jaipur gardens are not maintained for the benefit of the employees wholly. The fact that the gardens are used for meetings and seminars of Rajasthan Chamber of Commerce & Industry and others is hardly relevant for the assessee’s business. The expenditure should be judged from the business angle and not from other’s point of view. Looking to these facts, I shall disallow a sum of Rs. 25,000 from the total exp