JUDGMENT
Babu, J.
The assessee had claimed by way of deduction a sum of Rs. 11, 838 as the cost of gifts made on the occasion of the marriage of the daughter of the Chairman of the company with which he was having business relationship, and cost of personal gifts on festive occasions to others. The claim was sought to be justified on the ground of commercial expediency having been incurred for the purpose of business. The assessee was at the relevant time carrying on business as distributors of the products of Imperial Chemicals Industries, later known as Crescent Dyes & Chemicals Ltd. as also of other companies. The value of the presents given was claimed as a deduction for the assessment year 1980-81.
2. The claim so made was rejected by the Income Tax Officer and the Commissioner, but has been allowed by the Tribunal.
3. The learned counsel for the revenue submitted that gift made on the occasion of the marriage in the family of the Chairman of the company, is a gift of personal nature and cannot be regarded as a business expenditure as there is no nexus between the celebration of the marriage in the family of the Chairman of the company with which the assessee has business relationship and the invitation that the assessee might have received which itself would be of personal nature. It cannot be said that it was expected of the assessee that the assessee should present a valuable gift to the bride because the bride’s father happens to be the chairman of the company, any gift so given can only be a personal gift and not a gift by the company, given for business purposes. Counsel also submitted that if a view like the one taken by the Tribunal was to be regarded as correct, it would then open the doors to the assessee to claim as business expenditure gifts of enormous value such as gifts of diamond and gold jewellery as having been given on the occasion of the wedding of a director or officer of a company with which the assessee may have business relationship. The term ‘business’ however widely construed, it was submitted, cannot be extended to include the making of such personal gifts, when the invitation itself would be of a personal nature for the occasion at which the gift was made. Gifts made to friends and relatives are made out of friendship, regard or affection, born out of personal relationship and not on account of any business relationship.
4. The submissions so made for the revenue are worthy of our acceptance. Though the expenditure incurred for the purpose of business can be in varied forms and cannot be exhaustively enumerated, a line has to be drawn at some point between the expenditure for business purpose and expenditure on gifts made on the occasion of marriages in the families of director of the companies with which the assessee has business dealings, friends and relatives, which cannot qualify as business expenditure. If the assessee chooses to make such gifts out of the income received by the assessee in the course of his business, he can do so, but cannot claim it as a legitimate expenditure while computing his income for the purpose of taxation. The gift made by an assessee carrying on business on such occasions would be similar to that of any other person, who makes a gift on such occasions to his friends or relatives or official superiors or collegues, such gift being made out of taxed income.
5. Though it is difficult to draw a line with precision demarcating business from personal relationships, nevertheless, it has to be drawn somewhere and the marriages within the family of business associates, friends and relatives cannot be regarded as occasions requiring an assessee carrying on business to make gifts as a matter of commercial expediency and claim the same as business expenditure.
6. We, therefore, answer the question in favour of the revenue and against the assessee. No costs.