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Issues involved: Claim of business expenditure for educating a partner's son abroad, interpretation of business expenditure rules.
The judgment addressed the case of a partnership firm where the head of the family, a partner of the firm, claimed amounts spent on educating his son abroad as business expenditure for the assessment years 1978-79 and 1979-80. The son, who was initially admitted to the firm as a minor, later pursued higher studies and training abroad, returning to take some part in the firm's activities. The firm's counsel argued that if an employee had been sent abroad for training beneficial to the business, the expenditure would have been allowed as a deduction, regardless of the person's relation to a partner. The court analyzed an agreement within the firm but concluded that the son's education abroad was primarily a personal decision by the father, not a business-related deputation. Reference was made to a similar case where the High Court negatived a deduction claim for education expenses of a partner's son, emphasizing the personal nature of the expenditure. The court considered precedents from other High Courts, including a case where deduction for educating a partner abroad was allowed and another where a similar deduction claim was denied. Ultimately, the court held that the expenses incurred for the training of the partner's son abroad were not allowable as a deduction in the firm's hands, ruling in favor of the Revenue and against the assessee.
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