TaxTMI 
TaxTMI 
2014 (1) TMI 1140
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....g higher professional degree is an allowable business expenditure. The A.O denied the claim of the assessee on the ground that these two Directors are sons of the promoter directors of the assessee company and have been admitted as directors for the sole purpose of debiting their education expenditure to the profit and loss account of the company. On appeal, the CIT(A) has confirmed the disallowance made by the A.O by holding that the expenses are purely personal and under no circumstances can be stated to be commercial in nature or business purposes of the assessee company. 4. Before us the Ld. A.R of the assessee has submitted that Mr. Keyur Shah and Mr. Varun Makhija were employee as Directors of the assessee company in the prior years and not in the year when the expenditure on education was incurred and claimed of the assessee. He has further contended that these two Directors had already completed their basic education prior to employed in the assessee company. The education of MBA course was not in general but was very specific course of Marketing & Finance in case of Mr. Keyur Shah and similarly the technical course for Mr. Varun Makhija is also for getting direct benefi....
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....he earlier year and subsequently they were sent for higher education of MBA and technical courses to foreign countries. It is not disputed by the A.O that the assessee took the undertaking/bond from these two directors for joining back to the assessee company after completing their respective higher education. At the outset we note that for the assessment years 2006-07 and 2007-08 the assessee paid the Fringe Benefit Tax on these education expenses. The Assessing Officer has categorically dealt with the payment of value and chargeability of Fringe Benefit Tax as mentioned in the assessment order u/s 115 WE: "After verification, the value of Fringe Benefit chargeable to tax is accepted at Rs. 12,91,235/-." Thus, it is clear that the Fringe Benefit Tax paid by the assessee has been duly examined by the A.O and then accepted. Once the A.O has accepted the FBT paid by the assessee then such expenditure cannot be disallowed. The Co-ordinate Bench of this Tribunal in case of Hansraj Mathuradas Vs ITO (supra) has considered an identical issue in para 17 as under: "17. We have heard the arguments of both the sides and also perused the relevant material on record. The learned counsel for....
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....es and allow ground no. 4 and 5 of the assessee's appeal." 8. Apart from the payment of Fringe Benefit Tax and acceptance of the same by the revenue we further note that the expenditure in question has been incurred by the assessee for the professional higher education of its employees (directors) for reaping the benefit of the said higher education and accordingly the said expenditure is an allowable business expenditure. The Hon'ble Jurisdiction High Court in case of Sakal Papers Pvt. Ltd. Vs CIT (supra) has held as under: "On these facts, it appears to us impossible to accept the Tribunal's contention that merely because there was no commitment or contract or bond taken from the trainee, the expenditure, which was otherwise proper, should be disallowed to the company, particularly when as a result of that expenditure the trainee has secured both a degree and training which will be of assistance to the assessee-company and she has in fact served the assessee-company after her return to India. The relationship between the directors and the trainee is also to be borne in mind. With that relationship the question is whether any formal contract or bond is required. We are of th....
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....ra 3.2 as under: "3.2 I have considered the rival submissions and the materials on record. Personal element in such expenses cannot be ruled out. In my opinion, disallowance @ 20% is quite justifiable. This ground also deserves to be rejected." 13. It is clear from the findings of the authorities below that no specific averment or incident has been brought on record to indicate that the vehicle has been used other then the business purposes. Even otherwise in the case of company if it is found that the vehicle has been used for personal purpose then it can be considered as perquisites in the hands of the user employee. Accordingly, in the facts and circumstances of the case we do not find any justification on ad-hoc disallowance of 20% on this account. Hence the same is deleted. For the assessment year 2006-07 14. The assessee has raised the second ground as under: "The Commissioner of Income Tax(Appeals) erred, in the circumstances of the case and in law, upholding the Assessing Officer order of disallowing the claim of bad debts of Rs. 33,445/- " 15. The assessee has claimed an amount of Rs. 33,445/- as a part of bad debts. This amount have been advanced to an o....