P.K. Bansal, A. M.: This appeal has been filed by assessee against order of CIT(A), dt. 2ed Feb., 2001 for asst. yr. 1997-98. only issue involved in this appeal relates to sustenance of disallowance of Rs. 2,21,450 made by Dy. CIT, Circle 1(2). brief facts of case are that assessee derives income from consultation fees received mainly from General Electrical International Operations Co. Inc. (GEIOC) when assessee firm has been engaged as adviser by GEIOC for development of joint venture business opportunities in India. Apart from consultancy fees, assessee has also received sum of Rs. 4,80,000 to cover up local expenses on travel, accommodation, conveyance, etc. assessee has shown sum of Rs. 54,667 as amount recoverable from Sun Pharma for Burma visit expenditure. Thus, total expenditure received in this regard was Rs. 5,34,675 against which assessee has shown that it has incurred expenditure amounting to Rs. 4,70,616. AO noticed that these expenses include expenses incurred on foreign travel at Rs. 2,62,456 on travel to Dubai, Burma, Thailand and Cambodia. On query by AO, assessee submitted that travel was not in connection with GEIOC but it was for business purpose. In Dubai, it was to identify possibility of consulting arrangements. names and addresses of six persons in Dubai, along with photocopies of their visiting cards were furnished. In Thailand, it was stated that partners met representatives of Thai petrochemical companies to explore possibilities of export of intermediates and import of polymers for Indian company. In respect of Burma, it was stated that purpose of travel was for market research to prepare report on potential for pharma export to Burma. In respect of Cambodia, no explanation was submitted. AO noted that expenditure on travel to Dubai was only for air tickets and no expenditure for hotel and other expenses was there which indicates that visit was of personal nature. In respect of visits to Burma, Thailand and Cambodia, assessee has shown expenditure of Rs. 63,870 on air ticket and purchased US dollars worth Rs. 1,48,412. visit to Burma was supposedly at behest of Sun Pharma/Sun Petrochem (P) Ltd. and assessee has shown receipt of sum of Rs. 54,675. AO also noted that although assessee had claimed to visit certain drug store, and officer-in-charge of Economic Affairs in Indian Embassy, vouchers for expenses mainly consist of payment to travels and tours company for 7 days/6 nights tour of Myanmar in various places in Burma. For visits to Thailand and Cambodia, assessee has given list of important names and phone numbers. But, out of 14 names, only one resides outside India and contact numbers in each country visited include that of Ambassador, Embassy of India. Thus, AO was of view that this visit was not for purpose of business and no income has been derived by assessee except for amount receivable from Sun Pharma for Burma trip. AO, therefore, estimated 75 per cent of amount receivable from Sun Pharma to be considered for earning of such income and accordingly he allowed sum of Rs. 41,006 and balance amount of Rs. 2,21,450 was disallowed. When matter went on to CIT(A), CIT(A) confirmed order of AO by observing as under: "1.1. I have considered facts of case. appellant s income during year is related to its work for GEIOC within India. appellant gets lump sum amount for travel, accommodation, conveyance, etc., from them apart from consultancy charges. appellant has undertaken tours to various foreign countries and has claimed that same were for business purpose and during visit appellant has met various persons in these countries to explore possibilities of collaboration, export and import, etc. But, it is seen that except for names and addresses of certain persons (which also includes, names of officers of Indian Embassies in those countries), appellant had not furnished any evidence to show that there was some business discussion during tour. So far as Dubai tour is concerned, except names of persons contacted and letter from Baseem Trading Est., nothing has been submitted. From said letter, it is seen that son of partner of appellant firm stays in Dubai. It is further seen that tour to Thailand and Cambodia was package tour and same was case in Burma indicating that tours were personal in nature. It is also seen that appellant has worked during year only for GEIOC and for this work, appellant was not required to visit any foreign country. appellant has also not given any details regarding project on which he was working except that he went to these countries to explore possibilities of business tie-up and export/import. This is very vague explanation and does not prove that visits were related to business activity of appellant. Only in case of visit to Burma, it appears that he was asked by company, namely, Sun Pharma to do some work. appellant was to receive certain sum from them. But here also, details of work have not been given. However, because certain payment has come, it may be accepted that appellant might have done some work for said Sun Pharma. AO considering this has allowed part of expenses for Burma visit. It is also seen that appellant has not brought on record any correspondence with any party prior to and after visits. No person would go on visit to foreign countries for purpose of business without ascertaining convenience of parties whom he is planning to meet. After visit one would like to follow up matter with these parties. From facts of case, it is seen that nothing of this sort has been done. above discussions clearly indicate that visits to these foreign countries were personal in nature and hence disallowance made by AO is confirmed." learned Authorised Representative before us contended that assessee has visited foreign countries for business of assessee and thus, expenditures incurred for foreign travelling were for purpose of business of assessee. By referring to p. 7 of paper book, it was contended that assessee has duly submitted details of nature of work undertaken during visit and persons contacted, companies visited, necessary details of foreign travel vouchers were also filed. Referring to p. 16 of paper book, it was contended that M/s Baseem Trading Est. from Abu Dhabi, vide its letter dt. 13th March, 1996 requested assessee to visit Dubai, b u Dhabi, Sharjah and Muskat for developing business and exploring business opportunities in Dubai. Thus, it was contended that assessee has visited for exploring business opportunities and expenses on foreign travelling have been incurred for purpose of business. expenses cannot be disallowed merely on basis that assessee has not earned income during year. Reliance was placed on following decisions: decisions: Trailokyanath Mohanty vs. CIT 1977 CTR (Ori) 310: (1977) 110 ITR 254 (Ori); B. Magi Reddi vs. CIT (1993) 199 ITR 451 (Mad); CIT vs. Seshasayee Paper & Boards Ltd. (2000) 243 ITR 421 (Mad). In respect of visit to Burma through conducted tour, our attention was drawn towards paras 4, 5 and 6 on page No. 4 of paper book in which he has submitted that law and order situation in Burma is such that it is not easy for outsider to travel to cities like Mandlay and Bargan. Therefore, there is practice to use travel agent to plan entire itinerary which can be termed as package tour in other countries and since it was safer way of travelling, assessee visited there through package tour. tour is package tour and it need not prove automatically that no business is involved in this kind of package tour. AO although recognized business purpose for Burma trip, but has not allowed full expenditure of foreign travelling incurred by assessee. visits to Burma and Thailand are not for pleasure trip. Therefore, it was contended that expenditure on travel to foreign must be fully allowed. learned Departmental Representative, on other hand, contended that assessee went to four places. There is no evidence of any business being accrued out from these places. Even in subsequent year also no income has been accrued to assessee from these places. Package tours are taken for personal pleasure. Had assessee company to explore business possibilities, assessee would not have taken package tour. In package tour, travel is to visit to places, which are covered by package tour and has to move according to whims of tour operators. person is not free to move places according to his sweetwill. Since assessee has gone through package tour, therefore, expenses have not been incurred for purpose of business and orders of AO as well as CIT(A) must be confirmed. We have carefully considered rival submissions along with orders o f tax authorities below. This is admitted fact that assessee has incurred expenditure of Rs. 2,66,456 on travelling of partners to Dubai, Burma, Thailand and Cambodia. For going to Dubai, assessee contended that visit was for developing business between Gulf countries and India as assessee was already engaged in consultancy business. In this regard assessee has filed letter dt. 2ed March, 1996 written by Baseem Trading Est. from Dubai in which they have invited assessee for purpose of business. In addition to this, assessee has submitted names and addresses of various persons to whom assessee has visited. These details were also submitted before AO. AO was of view that visit to Dubai was personal visit and so far visits to Burma, Thailand and Cambodia, AO observed that assessee has gone through conducted tour in these countries, thus, visit was personal visit of assessee. Although assessee has claimed on record that while in Burma assessee has worked for Sun Pharma and Sun Petrochem and for this bill of Rs. 54,670 was raised and therefore AO has allowed expenditure on estimate basis for Burma visit i.e., 75 per cent of such expenditure amounting to Rs. 41,006 being incurred for business purpose. assessee claimed deduction under s. 37(1) of IT Act. For claiming deduction under s. 37(1), we are of view that assessee should comply with following conditions: (i) that expenditure is not of nature as described in sections 32 to 36; (ii) it should have been incurred during year; (iii) it should be in respect of business which is carried on by assessee, profit of which computes as asset; (iv) it should not be personal expenses of assessee; (v) it should have been laid down or expended wholly or exclusively for purpose of such business; and (vi) expenditure should not be in nature of capital expenditure. term for purpose of business is wider than expression "for purpose of earning income". For purpose of business will mean that expenditure should be for carrying of business. It need not be for expenditure should be for carrying of business. It need not be for earning of profit and if it is incurred for commercial expediency for carrying of business, it must be allowed. Even expenditure incurred by assessee voluntarily during course of business without necessity can be allowed if it is incurred for promoting business and to earn profit even though there is no compelling necessity to incur such expenditure. onus that expenditure has been incurred for purpose of business is on assessee. assessee has to prove genuinity of expenditure. Merely that assessee has not earned income, does not mean that assessee will not be entitled to claim expenditure if expenditure has been incurred for purpose of business and it is not capital or personal expenditure. This is fact that assessee adduced evidence in this case so far as its visit to Dubai. evidence is available in form of letter of party as well as names and addresses of parties to whom assessee has contacted for purpose of business. facts relating to visit to Dubai are different to facts relating to visits to Burma, Thailand and Cambodia. AO disallowed expenditure for Burma, Thailand and Cambodia keeping in view fact that assessee has gone to these countries through conducted tour. But, this is not fact so far expenditure incurred for visit to Dubai. There is no dispute that assessee has not incurred expenses. We, therefore, are of view that expenditure incurred by assessee for Dubai visit must be allowed as deduction as in our opinion these expenses have been incurred for exploring possibility of business in Dubai and assessee has furnished all necessary evidences which do not prove that these expenses are personal expenses of assessee. So far visit to Burma is concerned, we find that trip to Burma was carried out by assessee through conducted tour. although during course of visit, assessee has also carried some work and for which assessee has shown income from Sun Pharma. When person goes through conducted/package tour he has to visit and move according to plan, programme as agreed in package or has been planned by organizor. person who is going through conducted tour cannot move in manner he likes. Generally, conducted or package tour is undertaken for visit to particular places. No doubt, such package tours are often carried out when some seminars or conference are being organized by association of particular business. In that case, package tour cannot be regarded to be personal expenses. This is not case of assessee and no such contention was placed either before authorities below or before us. only plea for going through conducted tour was explained that Burma was not safer for travelling without package tour due to poor infrastructure. In our opinion, it is impracticable for assessee to plan its business when he is going through conducted/package tours even carried out by tour operators. Therefore, we are of view that AO, in our opinion, was quite reasonable while allowing sum of Rs. 41,006 on estimate basis towards expenditure incurred for business purpose in respect of visit to Burma. For visits to Thailand and Cambodia, we are of view that these visits have been carried out by assessee for personal purpose of partner as partner has gone to these countries also through package tours and visits through package tour are for personal purposes. No cogent material or evidence was brought on record by assessee which may prove that visits of these countries were not for personal purposes but for purposes of business. As we have already held that onus is on assessee to prove that assessee has visited these countries for purpose of business. Merely that assessee went to these countries through package tour will not automatically prove that assessee has gone to these countries and incurred expenditure for purpose of business. We, therefore, do not find any illegality or infirmity in order of CIT(A) so far disallowing expenditure for purpose of foreign travelling in respect of visits to Burma, Thailand and Cambodia. Accordingly, we confirm order of CIT(A) so far as it relates to sustenance of disallowance out of foreign expenditure incurred relating to Burma, Thailand and Cambodia. For expenditure incurred in respect of visit to Dubai, we direct AO to delete disallowance for such expenditure. In result, appeal of assessee is partly allowed. *** HASMUKH SHAH ASSOCIATES v. DEPUTY COMMISSIONER OF INCOME TAX