1. The Board have considered the question of allowability under section 37(1), expenditure incurred on training of apprentices covered under the Apprentices Act, 1961. Any expenditure to qualify for deduction under section 37(1) must be laid out or expended wholly and exclusively for the purposes of the business or profession carried on by the assessee.
2. Section 9(4), read with section 11, of the Apprentices Act, casts a legal obligation on the employers for imparting of basic training to the apprentices. If the number of employees in the establishment is 500 or more, then the training to the apprentices has to be given either in separate parts of the workshop building or in a separate building which is specially set up by the employer for this purpose. In case the number of workers is less than 500, the basic training is to be imparted to the apprentices in training institutes set up by the Government. In view of the statutory obligation cast on the employers under the provisions of the Apprentices Act, 1961, recurring expenses incurred on imparting of the basic training to the apprentices under the said Act will be allowable as a deduction under section 37(1).
3. As regards expenses for imparting of practical training under practical Training Stipends Scheme and Programme of Apprenticeship Training (PAT), these expenses will not be covered within the meaning of section 37( 1), as no statutory obligation is cast on the employer under these two training schemes.
Circular : No. 192 [F. No. 204/39/75-IT(A-II)], dated 10-3-1976.
