TMI Blog1991 (2) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... of tools manufactured by Gedore Tools India Pvt. Ltd. and the only income of the company is the share income from the partnership concern. The Director's son Shri Anoop Jhalani after getting his Master in Commerce joined the company and was paid a salary of Rs.2,500 per month. He continued in his employment for two months. Shri Anoop Jhalani had then gone to USA for obtaining his MBA degree from the University of Pennsylvania. The tuition fee paid was Rs. 81,438. The Board of Directors in their meeting dt. 26th July, 1982, passed the resolution of sending Shri Anoop Jhalani for obtaining of MBA degree, considering his track record in studies from school through his post-graduation. The resolution also provided that, the first year's tuition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection with the business of the company and in the absence of any direct nexus between the business of the company and the purpose of incurring of the expenditure the tuition fee was not allowed. The claim for deduction of salary paid was also not allowed on the basis that, no evidence for any service rendered had been planned on record. 3. The assessee had thus come on appeal before us and has placed its reliance on the decision in Hindustan Hosiery Industries vs. ITO (1984) 19 TTJ (Bom) 318: (1983) 5 ITD 349 (Bom) where a partner was sent abroad for advanced studies on Management, the claim for deduction of fees was held as allowable deduction from the business income. The plea of the assessee was that, the present day business has bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the company widening its activities, clearly indicate that, the company had incurred the expenditure solely with its business interest in mind and, therefore, the claim was fully allowable. As regards, the salary paid, he pleaded that the price escalation has been exorbitant, that, the salary of Rs. 2,500 per month is very small for a post-graduate in commerce. 4. The plea of the Deptl. Rep. was that, when an item of expenditure is considered for allowance against the income of a year, the facts of that year alone need to be considered and consideration of events that have occurred subsequent to the year would not be proper. 5. I have given very carefully consideration to the rival; submissions. The facts as they are, when conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal had not considered the decision of Supreme Court in Travancore Titanium Product Ltd. vs. CIT (1966) 60 ITR 227 (SC). He also observed that, direct nexus between the education expense and the business had not been established. The Tribunal observed that, it had considered the decision of Travancore Titanium Products case and that, the Gujarat High Court ruling would resolve the controversy. The Tribunal also observed that, :training in modern Business Management is definitely beneficial to the carrying on of any business. The mere fact that the said training is beneficial to any business does not obliterate the fact that, it is beneficial to the particular business carried on by the assessee firm. The mere fact that, it has incident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers in Business Management had returned to India, joined the company on a merger salary of Rs.1,000 per month, which goes to establish that Shri Jhalani had fulfilled his part of the contract of rejoining the company and allowing the benefit of his knowledge to the company. The subsequent happening or feature is already embedded in this year's facts, because, of the resolution which provides for such condition and, therefore, this year's facts alone cannot be considered for coming to a conclusion as to whether, the company had incurred the expenditure based on its commercial expediency or whether it represented the personal expenditure of the Director. I am, therefore, of the opinion that, the decision of the Tribunal in Hindustan Hosiery I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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