SC dismisses IT dept's plea against Wipro

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 SH 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.