Aswathanarayana & Eswara Vs DCIT (Madras High Court)
Expenditure incurred by assessee-firm on partner’s foreign education was to be allowed as deduction when such education was directly related to profession carried on by firm – Madras HC
Legal Provisions involved
Any expenditure not being in the nature of personal expenses of the assessee laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed as deduction in computing the income chargeable under the head ‘Profits and gains of business or profession’.
Facts of the case
Assessee is a partnership firm consisting of two brothers, two sons of one brother. All the four partners are duly qualified Engineers (B.E.) and the firm is carrying on Engineering Consultancy Profession for leading Indian Corporate Clients. One of the partner’s son, joined the firm in April 2000 after completing his B.E., degree. He had taken active part in the conduct of the business of the firm from the date of his induction as partner. Even while doing his B.E. Degree course, he is stated to have been attending the office of the firm and getting acquainted with reinforced concrete design, planning estimates and construction management. After graduation, he was made a working partner of the firm and he has worked on several projects, which have been mentioned by the assessee. In February 2001, he was sent to Australia for higher education. The duration of the course and training is for a period of two semesters and the course underwent was directly related to the profession carried on by the firm. The professional fee received by the firm had substantially increased due to higher education acquired by the said partner. The assessee-firm claimed the expenditure incurred on foreign education of the partner as deduction while computing its business income.
