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TMI Blog2014 (2) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... his chosen subject of study would aid and assist the company and is aimed at adding value to its business. It would be unwise for the Court to require all assessees and business concerns to frame a policy with respect to how educational funding of its employees generally and a class thereof, i.e. children of its management or Directors would be done - Nor would it be wise to universalize or rationalize that in the absence of such a policy, funding of employees of one class – unrelated to the management – would qualify for deduction under Section 37(1) – that was not such an intent in the statute which prescribes that only expenditure strictly for business can be considered for deduction – thus, the expenditure claimed by the assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he return of income, assessee had claimed a sum of Rs. 23,16,942/- as expenses incurred under the head Education Training Expenses . These expenses had been incurred by the assessee on higher education of Shri Dushyant Poddar, an employee of the company, who happens to be the son of the Directors Shri Lalit Poddar and Smt Saroj Poddar, for undertaking an MBA Course in the U.K. 3. During the assessment proceeding, the Assessing Officer ( AO ) required the assessee to justify its claim with respect to the said expenses. The assessee produced the extract from the minutes of the meeting of the Board of Directors dated 10.02.2005 in which decision was taken to send Dushyant Poddar for further study in U.K. and also the Employment Bond ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order refused to accept the assessee s contentions and rejected the argument that the sum of Rs. 23,16,942/- could be claimed as a deduction under Section 37 of the Act. Aggrieved by this disallowance, the assessee carried the matter in appeal. The CIT (Appeals) upheld the disallowance in the appellate proceedings. The CIT examined the bond furnished by Dushyant Poddar and observed that it was on plain paper and the other query as to what was the employee s response to the University s query with respect to funding for education remained unanswered. The CIT (Appeals) also was influenced by the fact that the bond was executed on 01.04.2005 after Dushyant Poddar had been selected for completing his MBA from the U.K. University. In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is otherwise proper cannot be disallowed to the company, especially when it can result in the trainee securing a degree that would be of assistance to the assessee. Likewise, the expenditure incurred for pursuit for higher studies by a partner which can yield beneficial results to the company was held to be business expenditure under Section 37 in Commissioner of Income Tax v. Kohinoor Paper Products, 1997 (226) ITR 220 (MP). Learned counsel also relied upon the decision of the Karnataka High Court in CIT v. Ras Information Technologies (Pvt) Ltd., 2011 (12) Taxman 158 (Kar). 7. Learned counsel for the revenue relied upon Natco Exports (supra) and submitted that the onus to show that the expenditure would accrue to the advantage of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a seamless transition as it were between the chosen subject of her undergraduate course and that which she chose to pursue abroad. In the present case, the facts are different. Dushyant Poddar was a commerce graduate. The assessee s business is in investments and securities. He wished to pursue an MBA after serving for an year with the company and committed himself to work for a further five years after finishing his MBA. There is nothing on record to suggest that such a transaction is not honest. Furthermore, the observation in Natco Exports (supra) with respect to a policy appears to have been made in the given context of the facts. The Court was considerably swayed by the fact that the Director s daughter pursued higher studies in re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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