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TMI Blog2006 (6) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... aw in holding that the expenditure on the higher education of an employee, was not a permissible deduction merely because the employee happened to be the son of the directors - - - - - Dated:- 3-6-2006 - Judge(s) : R. GURURAJAN., JAWAD RAHIM. JUDGMENT The judgment of the court was delivered by R. Gururajan J.-By this order, two references, in I.T.R.C. Nos. 420 of 1998 and 421 of 1998 are disposed of by a common order. The assessee-company is a private limited company engaged in the business of providing technical know-how towards manufacture of industrial explosives and also in certain allied manufacturing operations. The company belongs to Mr. Machado family comprising of N.J. Machado and his wife Mrs. W.S.P. Machado. They were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... responsibility of the company, that the expenditure on his higher education was motivated only by personal consideration and not for business consideration?" These two references relate to two different assessment years. Sri Parthasarathi, learned counsel took us through the entire material on record to contend that the Tribunal is wrong in reversing the order of the Commissioner and accepting the order of the Assessing Officer. Learned counsel says that disallowance of expenditure on the facts of this case require reconsideration. He strongly relies on various judgments in support of his contentions to contend that a mere relationship does not by itself provide for no allowance as held by the Tribunal. He wants the reference to be answ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only an undergraduate without any special or technical qualification. He was sent on training in general line of management and proposed a special emphasis. His training was hardly for a period of 1 1/2 years. Thereafter, the Tribunal also notices that the training that was availed of by the son has nothing to do with the technical side of production or manufacturing of explosives or access thereto. The Tribunal further notices that such type of education is as well available in this country as well. Taking note of all these factual aspects of the matter, the Tribunal was of the view that such expenditure incurred by the company cannot be considered to be an expenditure for the purpose of allowing in the case on hand. The bundle of facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain optimum production. It was on these facts, the Calcutta High Court accepted the case of the assessee. The Madhya Pradesh High Court in CIT v. Kohinoor Paper Products [1997] 226 ITR 220 has considered the allowance of education expenses. From a reading of the judgment, we do not find any reasoning as such in the said judgment. None of the judgments are applicable to the given circumstances. The bundle of facts would point out that the assessee is not entitled for any benefits in terms of the income-tax laws particularly in terms of section 37 of the Income-tax Act. Any expenses on the facts of this case would result in providing the benefit for the purpose of personal gain and not for the purpose for which the section is meant for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also the owner or a director of a business in which the son or daughter subsequently takes part." We are in agreement with the views expressed by the Madras High Court. The Revenue is also supported by the judgment of the Bombay High Court in the case of CIT v. Hindustan Hosiery Industries [1994] 209 ITR 383. The Bombay High Court in similar circumstances has ruled that there exists no nexus between expenditure and the business of the assessee and the expenditure incurred. In the light of the case law available on record and in the light of the given circumstances, we are of the view that the assessee has failed to make out a case for the purpose of deduction in terms of section 37 of the Act. The questions of law as referred to us a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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