TMI Blog2021 (5) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed. Booking expenditure under a wrong head of expenditure cannot be a ground for disallowance. The expenditure was incurred for the purpose of business and hence the same is allowed. Appeal of the assessee is allowed. - I.T.A. No. 381/Kol/2020 - - - Dated:- 5-5-2021 - J. Sudhakar Reddy, Member (A) And Aby T. Varkey, Member (J) For the Appellant : S.M. Surana, Advocate For the Respondents : Ranu Biswas, Addl. CIT, D/R ORDER Per J. Sudhakar Reddy, AM This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals) - 20, Kolkata, (hereinafter the Ld. CIT(A) ), passed u/s. 250 of the Income Tax Act, 1961 (the 'Act'), dt. 26/02/2020, for the Assessment Year 2010-11. 2. The sole issue that arises for our consideration in this case, is the disallowance of the claim of ₹ 23,69,443/-, incurred by the assessee towards fees paid to Babson College, USA, for a management trainee, Shri Karan Kanodia. The company has sponsored his four years degree course of business administration at Babson College, USA, under an agreement. The Assessing Officer disallowed this amount on the ground that (a) the expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a ploy to justify the expenditure on his education abroad. The residential address of Allahabad, mentioned in Service Agreement, appears to be incomplete. Thus the expenditure on the education of Shri Karan Kanodia is not justified from the business point of view. Now coming to the assessee's submissions regarding the decision given by Ld. CIT(A)-7, Kolkata in subsequent year, i.e. for A.Y. 2012-13, with due respect I differ from the views of the Ld. CIT(A). Facts of assessee's case are similar to those discussed in JBM Industries Ltd. vs. CIT (Supra) and Indian Galvanics Cyrium Foils Ltd. (Supra). The judgments cited by the appellant, in support of its contentions, are distinguishable on facts. In all the cases, relied upon by the assessee, the persons concerned had been working with company and they all were at least graduates. A person's specialization in any field decides his utility for a particular job. Specialization comes by experience or through education/training. If only educational background is considered, then the person should be at least graduate in a particular stream to assess his suitability for a particular job. But in the present case, the perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining the Company shall reimburse traveling expenses of the Trainee for corning to India to his hometown twice in the block of four years. 3. That after the completion of the training the trainee shall serve to the company for the minimum period of 60 months as Management Consultant , which will include functions assigned to him from time to lime by the Board of Directors of the Company The service period of 60 months will commence after 30 days from the date of completion of his education and training program as mentioned hereinfore. 4. That during period of his service to the Company, the trainee shall get monthly remuneration of ₹ 25000/- per month and get annual increment and enjoy the perks as per the Company rules. 5. That the said trainee shall discharge his duties conform to and comply with all the rules and regulations of the Company and Government, and shall not do or cause to be done anything against the interest of the Company. 6. That the said trainee shall, during the said terms, employ himself efficiently and diligently and to the best of his ability and shall devote his whole time and attention to the WORK generally carry out duties and wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 100.00 Lacs (Rupees One hundred Lacs only) to the Company as liquidated damages for premature termination of the agreement at the instance of the trainee. The said amount has been mutually agreed by and between the parties considering the circumstances of the case and also all the facts including the fact that the loss that will be suffered by the Company on this account that cannot be ascertained in terms of money and it shall not be open to the trainee in the event of any claim being made against him under his agreement, to plead that the amount of damages is excessive or that it tantamount to penalty or that it is otherwise irrecoverable according to law. The parties mutually agree that a sum ₹ 100,00,000/- shall be the minimum liability of the employee in the event of the breach of this agreement by him and the Company shall be entitled to recover the said sum in accordance with the terms of this agreement. B. That in addition to the liquidated damages, the said employee shall pay to the Company as specific damages, a sum of money, computed as damages actually suffered aid attributed directly or indirectly, to the premature termination of agreement at the Instanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law we now examine about the fact herein. As we have recorded so also it is admitted position that the company by valid resolution of the Board dated 21.12.1998 had appointed a trainee and this resolution was never questioned by anyone else. Therefore, it was not open for the Revenue Authority to question the legality, validity and propriety of the same. This appointment of trainee has to be accepted. We are of the view that the Learned Tribunal has made a little guesswork ignoring the aforesaid resolution appointing him as a trainee. Subsequently by another resolution taken on 21.9.1999 it has been decided that the said S. Kalyani who has been appointed as trainee shall be sent to USA for higher study to acquire special knowledge in modern technology in the field of agriculture for augmentation of production, improvement of quality and also for betterment of marketability and profitability. His duration of study and training was for a period of five years. The Board unanimously adopted that entire expenditure has to be borne by the company at the first instance, however, if the said S. Kalyani on coming back after completion of the education from abroad will be obliged to resume s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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