Snehal Mahendrakumar Shah Vs DCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that expenditure incurred for education of the daughter, who pursued the very same profession in which the father was, doesn’t make the same business expenditure. Father was morally bound to spend on the education of his daughter and hence the same is personal expenditure.
Facts-
Sole issue in the present appeals relates to claim of education expenses of the daughter of the assessee, which was denied by the authorities below holding the same to be personal in nature, and alternatively capital in nature.
Conclusion-
Even if the daughter of the assessee was pursuing any other course, the father was morally bound to spend on the education of his daughter. Therefore, the fact that the daughter pursued the very same profession in which the father was, was not a material fact for incurring the expenditure. As also stated above by us, that the business of the assessee remained in the family alone, was also a major contributing factor for the father to incur this expenditure. Therefore, the primary and dominant purpose for incurring this expenditure was personal consideration and not professional consideration.
The primary motive for incurring the expenses is to continue to carry the legacy of business and profession in the family and is purely personal in nature.
In view of the above, we have no iota of doubt in holding the impugned expenditure as personal and not allowable therefore as business expenditure.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER
Present appeal has been filed by the assessee against order passed by the ld. Commissioner of Income-Tax(Appeals)-4, Ahmedabad [hereinafter referred to as “Ld. CIT(A) under section 250(6) of the Income Tax Act, 1961 (“the Act” for short) dated 7.1.2019 pertaining to the Asst. Year 2015-16.
2. Sole issue in the present appeals relates to claim of education expenses of the daughter of the assessee, which was denied by the authorities below holding the same to be personal in nature, and alternatively capital in nature.
3. The ground raised by the assessee in this regard reads as under:
“1. The Learned CIT(A) has erred in confirming the addition as personal expenses to the income made by the learned Assessing Officer in respect of “Education Expenses” amounting to Rs.23,52,809 for Miss Sunaina Shah who is an employee of the assessee’s architectural firm for her further studies in abroad without appreciating the facts of the case and judicial precedents on similar facts and considering the same as personal expense.”
4. The facts relating to the said expenses being that the assessee, Snehal Mahendra Kumar Shah, is an architect and interior designer and the educational expenses of his daughter incurred by him, amounting to Rs.23,52,809/-, were in relation to advanced studies in the field of architecture from “Association School of Architecture, London, U.K”, his daughter, Ms.Sunaina Shah, having cleared her Bachelors degree in architecture from CEPT University in the year 2015.
5. The contentions of the ld. counsel for the assessee before us was that the said expenses had been incurred wholly and exclusively for the purpose of the business of the assessee, and had not been incurred for the reason that Ms. Sunaina Shah was the daughter of the assessee. In this regard, he emphasised the fact that the assessee’s daughter was a highly qualified architect working in the assessee’s firm and wanted to pursue higher education; that she had studied in various prominent institutions , interned with globally acclaimed architects and had a huge repertoire of knowledge and That she had agreed to work with the assessee for five years after completing her education. It was pointed out that her knowledge gained in the process had substantially contributed to the business of the assessee’s firm. That therefore the expenditure was incurred solely for the purpose of the business of the assessee, and there was no personal reason and intention behind incurring the same. In this regard ld.counsel for the assessee drew our attention to the submissions made before the ld.CIT(A) pointing out that she was an highly qualified architect who had sufficient degree from various prominent universities of the world, as given at page no.4.4 of the order.
“4.4 Ms. Sunaina is a Highly qualified architect and has been conferred and holding the following professional degrees:
