Business deduction denied for partner's son's foreign education costs treated as personal expenditure, not commercial outlay.

Expenditure by a firm on a partner's son's foreign education and training was treated as personal rather than business expenditure because the arrangement was in substance a father's provision for his son, not a deputation for the firm's business needs. The agreement was regarded as a colourable form lacking commercial substance, so the spending was not laid out wholly and exclusively for business purposes. The expenditure was therefore not allowable as a deduction in the firm's hands, and the issue was decided against the assessee.

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Issues: Whether the expenditure incurred by the firm on the partner's son's foreign education and training was allowable as a business deduction in the hands of the firm.

Analysis: The arrangement was held to be, in substance, a step taken by the father for the education of his son and not a deputation of an employee or partner for the business needs of the firm. The agreement relied upon was treated as a colourable form lacking decisive commercial substance. The expenditure was therefore characterised as personal in nature rather than as one laid out wholly and exclusively for business purposes.

Conclusion: The expenditure was not an allowable deduction in the hands of the firm and the answer is against the assessee.

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