9911796707
TMI Blog1988 (4) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... Sr. Bharat Argade was sent abroad in terms of agreement dt. 24th Oct., 1978 to prosecute his studies in United States of America where he studied for the Course of Master of Business Management. 2/3rd of the total expenditure of his studies abroad were to be borne by the firm of Argade Shyam & Co. (Taxation) and 1/3rd of the expenses were to be borne by Argade Shyam & Co. (Audit). Shri Bharat Argade under took to continue service with the two firms as their respective partner for five years after completing the course and he served with the firms as a partner after his return form the USA duly qualified. For the asst. yr. 1980 81 and 1981-82, both the firms claimed deduction of expenses incurred in this regard which amounted to Rs. 28,142 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 703 (Guj) and the Supreme Court decision in the case of Sason J. David and Co. P. Ltd. vs. CIT (1979) 10 CTR (SC) 383 : (1979) 118 ITR 261 (SC) to give a finding in favour of assessee. She held that the expenditure incurred by the firms for the education of the partner should be allowed as revenue expenditure. Against this order of the AAC the Revenue is in appeal for both the years in both the firms. 4. Sri. P.K. Sridharan, the learned Departmental Representative argued that by incurring this expenditure, the firms had in effect amended their capital structure. In fact, there was an amendment in the terms of the partnership deed, inasmuch as, the expenditure was incurred for starting a new activity namely providing management account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was gaining was such that it would definitely benefit the business carried on by the assessee-firm. In order to be capital expenditure, that expenditure should not only bring into existence a benefit of enduring advantage or benefit but the same should also be in the capital field. In the present case, even assuming that the benefit, if considered to be of enduring in nature, was not in the capital field of the assessee-firm and, therefore, it could not be said to be capital in nature. 6. We have heard the parties. We have already given the details of the expenditure incurred and the manner of the observations. We find from the copy of the agreement dt. 24th Oct., 1978 (filed before us) which was entered between the two firms and Sri. Bha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndividually or in partnership with chartered accountants (in practice), he in consideration of remuneration received or to be received : (iv) renders such other services as, in the opinion of the Council, are or may be rendered by a chartered accountant (in practice); and the words " to be in practice" with their grammatical variations & cognate expressions shall be construed accordingly." One of the resolutions passed under this section reads as under: "Pursuant to s. 2(2)(iv) of the Chartered Accountants Act, 1949, the Council hereby reiterates its opinion that the service that may be rendered by a Chartered Accountant in practice include the entire passage of Management Consultancy Services." A copy of the statement on payment to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid down in this test. What is material to consider is the nature of the advantage in a commercial sense sand it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may ensure for an indefinite future ..... X X X X Extracts X X X X X X X X Extracts X X X X
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