In the absence of nexus between Education expenditure incurred for Director’s son and business of assessee company the same is not deductible

Echjay Forgings Ltd. v. ACIT (2010) 328 ITR 286 (Bombay High Court)Can expenditure incurred by a company on higher studies of the director’s son abroad be claimed as business expenditure under section 37 on the contention that he was appointed as a trainee in the company under “apprentice training scheme”, where there was no proof of existence of such scheme?

On this issue, it was observed that there was no evidence on record to show that any other person at any point of time was appointed as trainee or sent abroad for higher education. Further, the appointment letter to the director’s son, neither had any reference number nor was it backed by any previous application by him. The appointment letter referred to “apprentice training scheme” with the company in respect of which no details were produced. There was no evidence that he was recruited as trainee by some open competitive exam or regular selection process. Hence, there was no nexus between the education expenditure incurred abroad for the director’s son and the business of the assessee company. Therefore, the aforesaid expenditure was not deductible.

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