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2010 (7) TMI 670 - HC - Income TaxDeductions u/s 37(1) - Assessee is a consulting agency in manufacturing and engineering Industry - They have sponsored the candidature of Sri Arun Srinivasan(son of the Managing Director), to pursue his post-graduation course in engineering - In that regard, they have entered into a written contract - While pursuing the studies, the student has rendered services, which is acknowledged by the assessee - Merely because in the agreement there was a clause that in default of his rendering services, he would return the sponsored money with interest, the genuineness of the agreement cannot be doubted - On the contrary, it only shows that the assessee had taken precaution to see that the interest of the assessee was protected by imposing such a condition on the student - Even otherwise, when the assessee is running an Engineering and Consulting Services, earning profits and in pursuance of its business or profession, it laid out certain monies for education of a student in the very same field, such an expenditure cannot be held to be unlawful or prohibited by law - Having regard to the quantum of amount spent it cannot also be said that it is a devise to avoid payment of tax or to reduce the tax by such a device of sponsoring a student's studies abroad - Decided in favour of assessee.
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