9911796707
Advanced Search 
TMI Blog1991 (5) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... .S.A. for further studies and getting admitted in North Carolina State University, Raleigh, NC for obtaining degree in M.S. in Management. He already had degree of civil engineering from Gujarat University. The assessee pleaded that the course of management at the university included subjects like computer science, economics, operation research, computer programming, automatic and speedy process management, system analysis, industrial climate and environment and water pollution controls, etc. The assessee further pleaded that under the agreement amongst the partners the firm was to bear half the expenses incurred by the said partner in prosecuting the studies abroad subject to maximum of Rs. 2,25,000 and the said partner undertook to serve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the learned Departmental Representative was that the business of the assessee was iron and aluminium casting and the study course which was pursued by Shri S.M. Shah abroad had no direct nexus with said business and as such it could not be said that the expenses had been incurred wholly and exclusively for the purpose of business. According to him, the expenses were personal expenses of Shri S.M. Shah and those expenses were being claimed as expenses of the firm in order to claim deduction in computation of profits and gains of business. He relied on the following observations in Siddho Mal & Sons v. ITO [1980] 122 ITR 839 (Delhi) :-- " Relationship by itself, without more, cannot lead to the inference of excluding the possibility o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. (P.) Ltd. v. CIT [1979] 118 ITR 261, in which the Supreme Court observed that "wholly and exclusively" did not mean "necessarily". He also relied on the decision of Gujarat High Court in CIT v. Natwarlal Tribhovandas [1973] 87 ITR 703 and a decision of Bombay Bench of the Tribunal reported in Taxes and Planning, a copy of which was filed in the paper book. 8. We have considered the rival submissions and facts on record. The primary condition for allowance of deduction is that the expenses are incurred wholly and exclusively for the purpose of business. The first adverb "wholly" in the phrase " laid out or expended wholly and exclusively ", in section 37(1) refers to the quantum of expenditure, the sum of moneys spent while the second a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the partner was pursuing had direct connection with the business of the firm. Such is not the case here. No High Court decision has been cited on behalf of the assessee which would indicate that even if a partner went abroad to pursue studies in subjects which had no direct connection with the business activity of the firm, deduction of such expenses would be allowable. In Travancore Titanium Product Ltd v. CIT [1966] 60 ITR 277 the Supreme Court has held that in determining whether the amount expended by the assessee is deductible under section 10(2)(xv) of the Indian Income-tax Act, 1922, which is in pari materia with section 37(1) of the Income-tax Act, 1961, the nature of expenditure or outgoing must be adjudged in the light of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a finding of fact recorded on the facts of the case. The facts of each case will have to be scrutinized separately and decision on this question would be required to be arrived at. On the question as to what factual inference should be drawn from a series of facts would depend on peculiar facts of each case and earlier decisions could not be a guide for that purpose. 11. In the present case, we further find that the assessee had submitted before the ITO the details about the activities of the said partner which is at page 14 of the paper book. The details given therein indicate that from June 1984 to the date on which the information was given to the ITO in January 1987 the said partner was working as teaching assistant in Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee was accepted by the Department under section 143(1) of the Act. Mere fact that the return of subsequent year was accepted under section 143(1) would not mean that the expenses for assessment year 1984-85 were allowable. Allowability of expenses for assessment year 1984-85 has to be determined independently after considering the facts of the case. The return in which income shown is below Rs. 1 lakh is now accepted by the Department under section 143(1) as a matter of administrative policy and instructions to that effect have been given to the Income-tax Officers. Acceptance of return under section 143(1) for subsequent years would therefore, be irrelevant as far as the point in controversy was concerned. 13. For reasons giv ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
