2020 (12) TMI 438 - AT - Income Tax

Disallowance of business expenditure - expenditure incurred by the Assessee for attending two separate training courses - HELD THAT - Expenditure incurred by the Assessee is a genuine expenditure and the training undergone by the Assessee is also a genuine one and that it relates to business. Though, it may not be directly connected to the business of the Assessee but it relates to the Assessee to run the business with better management skills for his business and also in implementing the systems process in his manufactures. In our opinion, every businessman have a right to acquire knowledge and special skills in management for implementation of systems and new techniques. In the present case, the Assessee has did the same thing. Simply because the turnover has fallen down and further granting license is pending before the Government are not at relevant factors to deny the business expenditure claimed by the Assessee. We are of the opinion that the entire expenditure incurred by the Assessee for attending two separate training courses for acquiring knowledge and technical expertise for better management of the process are directly connected to the business of the Assessee. Therefore, the same has to be allowed. Allow the appeal filed by the Assessee.

Summary

Issues:
Appeal against disallowance of business expenditure for training programs.

Analysis:
The appeal was filed against the order disallowing business expenditure claimed by the Assessee for training programs related to quarrying granite boulders and manufacturing blue metal. The Assessing Officer and the Commissioner of Income Tax (Appeals) had denied the expenditure, citing a decrease in production and turnover, and pending license extension as reasons. The Assessee argued that the training was essential for better management skills and implementing systems and processes in the business. The Tribunal noted that the Assessee had a genuine need for the training, which was confirmed by the Assessing Officer. The Tribunal emphasized that acquiring knowledge and skills for better business management is crucial, even if not directly linked to current business operations. Thus, the Tribunal held that the expenditure for training was directly connected to the business and should be allowed.

The Tribunal observed that the Assessee, engaged in quarrying and manufacturing activities, had a significant decrease in turnover. Despite this, the Tribunal recognized the legitimacy of the expenditure incurred for training programs. The Tribunal highlighted that the training aimed to enhance the Assessee's management skills and implement better systems and processes in the business. The Tribunal emphasized that acquiring knowledge and technical expertise for improved business management is essential for any businessman. Therefore, the Tribunal concluded that the expenditure for training was genuine and directly related to the business, warranting its allowance.

In the final judgment, the Tribunal allowed the appeal filed by the Assessee, overturning the decision of the Commissioner of Income Tax (Appeals) to disallow the business expenditure for training programs. The Tribunal set aside the earlier order and concluded that the entire expenditure incurred by the Assessee for attending the training courses was directly connected to the business activities. As a result, the Tribunal allowed the appeal of the Assessee, emphasizing the importance of acquiring knowledge and technical expertise for better business management through training programs.