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TMI Blog2012 (2) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... n this basis, it is claimed that the said stock was not accounted for in the books of account. We are of the view that the reason given by the assessee for non inclusion of these two items in the books of account on account of close of accounting period was genuine as also acceptable. We, therefore, find no fallacy in the relief granted by the Ld. CIT(A). The same is hereby confirmed and this ground of the revenue is dismissed. Addition on expenditure incurred on foreign raining of the Director’s daughter as employee of the assessee company - Held that:- This issue is squarely covered by the decision of Hon’ble Karnataka High Court rendered in the case of RAS Technologies (2010 (7) TMI 670 - KARNATAKA HIGH COURT ) wherein the expenditure for foreign education of Managing Director’s son was held as business expenditure and therefore, directed to allow the same. Following this decision and the decision referred by Ld. CIT(A), we hereby confirm the relief and resultantly, this ground of the revenue is hereby dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... the year under consideration. With this brief background, we have been informed that now this issue stood settled by the Hon'ble Supreme Court in the case of TRF Ltd as reported in 323 ITR 397 (S.C.). This ground of the revenue is therefore, dismissed. 7. Ground No.3 reads as under: "3. The Id. CIT(A) has erred in law and on facts in deleting the addition of ₹ 74,03,784/- made by the A.O. on account of unexplained investment in stock." 8. The A.O. has perused the statement of stock which was furnished to the bank by the assessee. He has noted that there was discrepancy in the stock disclosed as per the bank. A reconciliation was offered by the assessee as follows: "1. Stock as per statement given to the bank 51664008/- (-) less stock of old items and non moving items written off/scrapped 2840725/- (-) Less Excise duty include in closing stock of raw materials deducted as Per AS-2 1344328/- (-) Less dispatch made but not reflect in the bank stock statement 4563059/- Stock as per balance sheet 42915896/- 9. In respect of the adjustment of ₹ 28,40,725/-, the assessee has placed the list of non moving items which were written off by the assessee. The A.O. wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with State Bank of India. In respect of non moving articles of stock, it was stated by the Ld. A.R. before us that the articles are items of raw material written off during the year. A long list in the paper book of those items has been placed to demonstrate that the small articles were not in use in past few years and hence, those were written off in the books. Ld. A.R. has also stated that the statement was furnished to the bank prior to the close of books of account and hence, those were made part of stock statement before the bank. However when inventory of stock was taken at the close of the accounting period, the same was not recorded therein. Next, in respect of the other item of controversy, a list of all the sales involved through which the stock was dispatched to various parties along with their names, invoice number, placed on record. As per the said details, the dates of invoices were starting from 28.03.2005 to 31.03.2005 and on this basis, it is claimed that the said stock was not accounted for in the books of account. We are of the view that the reason given by the assessee for non inclusion of these two items in the books of account on account of close of accounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whole expenditure incurred on her training along with interest. Considering the service agreement and the importance of training in H.R. for the growth of the company and the fact that she was already an employee of the appellant company prior to the training , I would hold that the expenditure is allowable as business expenditure . I further find that the cases cited by the A.O. are related to son of partner in two cases (1) CIT Vs. Hindustan Hosiery Industries -209 ITR 383 (Bom.) (2) M. Subramaniam Bros. Vs. CIT - 250 ITR 769 (Mad.) and in the other case of CIT Vs. R.K.K.P. Steels (P) Ltd - 258 ITR 306 (Mad) ,the son of the Director became Director subsequently and he was not an employee earlier. In view of the above facts as the training of Ms. S. S. Modi was incurred for the purpose of business of the appellant company the expenditure is held to be allowable and the disallowance is deleted." 15. Before us is a service agreement placed o n record executed by M/s. Mazda Ltd., the assessee company on one hand and Ms. Shanaya S Modi, Daughter of Mr. Sohrab Modi on the other hand. Our attention was drawn on the following important clauses: "1. The company agrees to send Ms, SM w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een made at Bar that still Ms. Modi is working as a whole time director of the company. With this factual background, reliance is placed on the decision in the case of ACIT Vs Prime Chemicals rendered in I.T.A.No. 3782/Ahd/2004 dated 27.03.2009. Ld. A.R. has also placed reliance on the decision in the case of CIT Vs RAS Information Technologies (ktk.) as reported in 238 CTR 76. 17. On the other hand, from the side of the revenue, Ld. D.R. Mr. G. S. Souryawanshi has said that had it was not a case of a daughter of a director then the company would not have sent its employee on such high expenditure for further studies outside India. According to him, the company has not sanctioned higher education for any other employee. 18. Having heard the submissions from both the sides, we are of the view that the issue is squarely covered by the decision of Hon'ble Karnataka High Court rendered in the case of RAS Technologies (supra) wherein the expenditure for foreign education of Managing Director's son was held as business expenditure and therefore, directed to allow the same. Following this decision and the decision referred by Ld. CIT(A), we hereby confirm the relief and resultantly, thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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