| 17/5/2012 |
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| Board of Special Commissioners - Cases |
| Case no. 1/54 |
Decided: 22 May, 1954 |
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Deduction in respect of travelling expenses - articles 10 and 11, now 14 and 26, Income Tax Act
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Appellant had made a long journey during which he visited various suppliers. The Commissioner disallowed the total expense of Lm141 as, according to him, the expense had not been wholly exclusively incurred in the production of the outcome.
The Board based its decision on the following principles: (a) for a deduction to be allowed it is sufficient that it should be justified by commercial expediency and that it is made in order to facilitate the carrying on of the trade; (b) the expense is to have been made for the purposes of earning the profits; and (c) expenses which are incurred for purposes which are not business are not expended wholly and exclusively for the purposes of the trade.
The Board accepted appellant's arguments that the visit was necessary to ensure that he purchased the latest and the best products, and to keep in contact with his suppliers.
However, since appellant had himself admitted that expenses in respect of only 15 out of a total of 40 days had been incurred for the purposes of the trade, it followed that strictly speaking such expenses had not been "wholly and exclusively incurred in the production of the income". It was, therefore, reasonable to allow the expenses to the extent to which they were wholly and exclusively referable to appellant's business. It was held that appellant's claim (of 15 days) was a bit on the high side and 10 days were considered to be more reasonable (deduction allowed amounted to Lm115).
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