TMI Blog2012 (9) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... rning back in pursuance to contractual obligation, such person joins the company itself, then in such circumstances, it may not be treated as expenditure for personal reason because of relationship with an office bearer. The expenses incurred should be for the purpose of the company which has been benefitted because of training and higher education imparted to the person concerned. - Decided in favour of assessee - ITA No. 16 of 2009 & 138 of 2009 - - - Dated:- 18-9-2012 - DEVI PRASAD SINGH VISHNU CHANDRA GUPTA, JJ. ORDER 1. These two appeals filed by the appellant against the assessment year 2001‐02 and 2004‐05 involve common question of law and facts, hence with the consent of the parties' counsel are bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity relying upon the provisions contained in Section 47 and 40A (g) of the Income Tax Act held that the expenditure incurred on the studies and training of Mr. Priyank Tayal was not a business expenditure, hence added in the overall income of the assessee. Feeling aggrieved, the appeal was preferred and the appellate authority in the first round of litigation, by its order dismissed the appeal of the assessee. However, on appeal to the tribunal, the matter was remitted back for decision afresh to the assessing authority to adjudicate the controversy, by order dated 21.11.2005 after examining the issue on certain points. In the second round, the assessing authority has reiterated its earlier order. Hence, the appeal was preferred before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act is reproduced as under : Section 40A(2)(b) in The Income‐ Tax Act, 1995 (b) The persons referred to in clause (a) are the following, namely:‐ (i) where the assessee is an individual any relative of the assessee; (ii) where the assessee is a company, any director of the firm, association of persons or company, partner of the Hindu undivided family firm, of member if the association or family, or family, or any relative of such director, partner or member; (iii) any individual who has a substantial interest in the business or profession of the assessee, or any relative of such individual; (iv) a company, firm, association of persons or Hindu undivided family having a substantial interest in the business or profession of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower; and (b) in any other case, such person is, at any time during the previous year, beneficially entitled to not less than twenty per cent of the profits of such business or profession. A plain reading of the aforesaid provisions of the Act does not reveal that there is complete prohibition because of relationship. Merely because there is relationship with office bearers of a company, a person cannot be deprived to be engaged during the usual course of business in terms of agreement with due education and training. In the present case, admittedly, Mr. Priyank Tayal was a trainee of the management itself and was sent to U.S.A for higher education and training and after coming back, he has joined the company itself. It is the company whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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