COMMISSIONER OF INCOME-TAX, GUJARAT AHMEDABAD vs TEJAJI FARASRAM KHARAWALLA LTD.

The Supreme Court interpreted Section 4(3)(vi) of the Indian Income-tax Act, 1922, determining that the term 'incurred' includes 'to be incurred', thus allowing exemptions for amounts received to meet expenses wholly and necessarily incurred in the performance of duties. The Court held that any surplus remaining after meeting such expenses does not qualify for exemption and is considered additional remuneration. The previous ruling in Tejaji Farasram Kharawala v. Commissioner of Income-tax was disapproved, affirming that only the actual expenses incurred should be taxed in the relevant accounting year.