TaxTMI 
TaxTMI 
2015 (4) TMI 547
X X X X Extracts X X X X
X X X X Extracts X X X X
....mpany running a hospital. The assessee filed return of income for the assessment year 2005-06 on 31.10.2005 declaring a total income of Rs. 94,43,461/-. The assessee claimed deduction in a sum of Rs. 5,00,000/- spent for the higher education of Dr.Gowri S. D/o. Dr.A.C. Sriram and Mrs.Kala Sriram, who are Managing Director and Executive Director of the Company. The exemption was claimed on the ground that their daughter was committed to work for the assessee after successful completion of her studies. It is not in dispute that after successful completion of studies, she has come back and working in the said assessee - company. She was paid a sum of Rs. 20,000/- per month as salary before she was sent for higher studies. After returning, she ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ness prudence to justify for allowance under Section 37(1) of the Act? 3. Whether in law, the provisions of Section 40A was applicable when the expenditure was in business prudence incurred for the benefit of the Appellant whose value was not proved to be excessive? 5. We have heard the learned counsel for the parties. This Court had an occasion to consider the said question in the case of Commissioner of Income Tax and another V/s. RAS Information Technologies (P) Ltd., reported in (2011) 238 CTR (Kar) 76. After noticing Section 37(1) of the Act, it was held as under at paras 8 and 9: 8. Thus, once the expenses incurred is not a capital expenditure or an expenditure incurred for personal expenses of the assessee or the said expenditure ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....student in the very same field, such an expenditure cannot be held to be unlawful or prohibited by law. Having regard to the quantum of amount spent it cannot also be said that it is a devise to avoid payment of tax or to reduce the tax by such a device of sponsoring a student's studies abroad. In the facts and circumstances of the case keeping in mind the amount extended towards the educational expenses and the nature of the education and also other attending circumstances, we are satisfied that the amount expended by the assessee is not a devise to avoid payment of tax or reduce payment of tax and this expenditure is a bona fide in that view of the mater, we do not find any merit in these appeals." 6. In the instant case, before expendit....