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ITAT Mumbai clears businessman's Rs 6.42 lakh travel on wife's card

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ITAT Mumbai ruled a Mumbai businessman's Rs 6.42 lakh foreign travel spend paid on his wife's credit card and reimbursed cannot be disallowed.

The Income Tax Appellate Tribunal (ITAT) in Mumbai has partly ruled in favour of a Mumbai-based businessman whose Rs 6.42 lakh in foreign travel spending was rejected by the tax department because he had settled the bills using his wife's credit card and repaid her later. The bench of Judicial Member Challa Nagendra Prasad and Accountant Member GM Doss held that a genuine business cost does not lose that character simply because a spouse's card was used to make the initial payment.

The order, passed on August 31, 2026, found that nothing in the law stops a taxpayer from covering business costs through a spouse's credit card and then reimbursing that person. The businessman had earlier lost the same argument before the Commissioner of Appeals (CIT-A) before taking the matter to the tribunal.

The Rs 20.32 lakh travel bill

According to the material placed before the tribunal, the man travelled to Paris, Russia and other locations for work and ran up total travel costs of Rs 20.32 lakh. Of that sum, Rs 6.42 lakh went through his wife's credit card, and he said he paid her back once he returned to India.

During assessment, the Assessing Officer (AO) treated that Rs 6.42 lakh as unexplained. The officer's view was that the wife had nothing to do with the trips and that the money had moved through her card, so the amount was struck out of the man's business expenditure.

The AO also trimmed other parts of the travel claim. A sum of Rs 1.49 lakh had been paid in cash, and the officer knocked off 20 per cent of it on the basis that cash outgoings could not be fully checked. A further 20 per cent was cut from the balance of Rs 12.4 lakh in foreign travel, with the officer saying the taxpayer had not supplied enough detail - including who had travelled and what services those people had supplied.

A gap between Form 26AS and the books

A second dispute concerned the income figure itself. Form 26AS put the man's income at Rs 79.87 lakh, while his own books of account showed Rs 75.51 lakh. The AO wanted to tax the shortfall of Rs 4,36,400.

The tribunal did not settle that point. It sent the Rs 4,36,400 question back to the Assessing Officer to be checked again, while granting relief on the credit card issue.

Expo trips backed by documents

The businessman's chartered accountant laid out the trips before the tribunal. He said Rs 3.97 lakh had been spent on travel to Metal Expo in Russia and Rs 4.94 lakh on the CNR Expo in Istanbul, Turkey - Rs 8.91 lakh in all. Part of that was paid on the wife's card, and the CA backed the claim with expenditure records and the wife's bank statement.

The CA also leaned on an earlier ITAT Mumbai decision in the Girish Raghavan matter, ITA No. 6955/Mum/2025, dated March 4, 2026.

The tribunal accepted that the spending was real and tied to business travel abroad, and that the route of payment did not alter what the money was for. "There is nothing in law which precludes an assessee from incurring business expenditure through the credit card of his spouse and thereafter reimbursing the said expenditure to the spouse," the bench recorded. It saw nothing wrong with the arrangement, and its conclusion cut against the reasoning the CIT-A had used.

The members also dismissed the suggestion that the repayment amounted to a fee for the wife's services, which would have called for tax to be deducted at source. Because she had provided no separate service of her own, no such deduction arose.

Keep the paper trail, adviser warns

Pranshu Goel, Partner at Ashok Pranshu & Co., told ET that the tribunal ruled for the taxpayer once it was satisfied the costs were genuinely incurred for overseas business travel. He noted that families often route spending through one member's card to collect reward points, cashback or travel perks.

Goel cautioned, however, that paperwork cannot be treated as an afterthought. "However, taxpayers must preserve the complete documentary trail, purpose, invoices, card statements and proof of reimbursement to substantiate that the expense is for the purpose of business and is not a personal expenditure," he said. He added that large card transactions now surface in the AIS/TIS records, so spending that looks out of line with a cardholder's declared income can invite questions unless the money's source and the repayment are clearly documented.

ITAT Mumbai, income tax, business travel expenses, wife credit card, tax disallowance, Form 26AS, AIS TIS, reimbursement

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