TaxTMI 
TaxTMI 
2012 (9) TMI 1021
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....g that the expenditure incurred by the Assessee company on foreign education and travel of son of the Managing Director of the Company was business expenditure ? The assessee company is engaged in the manufacture and sale of Asbestos sheet and allied products. The company was selected for scrutiny as per Board's circular. The assessee furnished the substantial audit report in pursuance to recommendation for the purpose under Section 142 (2A) of the Act. A notice under Section 142(1) along with a questionaire under Section 143(2) was issued, in response to which the assessee filed details and particulars. During the course of proceeding before the assessing authority, question cropped up with regard to expenditure incurred on education ....
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.... counsel for the appellant invited attention of this Court to Section 37 and 40A(2)(b) of the Act and submits that the expenditure incurred for the training of Mr. Priyank Tayal cannot be a business expenditure. Being the son of the Managing Director, he has been given the benefit of the company. No son of other employee ever has been sent to abroad for education and training. The instant case is the only case where a person has been sent to abroad for training. It is further submitted by Mr. Chopra that the expense is of personal nature and not exclusively spent for the purpose of business. Accordingly, it may not be held to be business expenditure under Section 37 of the Act. While inviting attention to Section 40A(2)(b), it is submitted ....
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....s a substantial interest in the business or profession of the assessee; or any director, partner or member of such company, firm, association or family or any relative of such director, partner or member; (vi) any person who carries on a business or profession,‐(A) where the assessee being an individual, or any relative of such assessee, has a substantial interest in the business or profession of that person; or (b) where the assessee being a company, firm, association of persons or Hindu undivided family, or any director of such company, partner of such firm or member of the association or family, or any relative of such director, partner or member, has a substantial interest in the business or profession of that person. Explanation.....
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....r company or establishment. It is well settled proposition of law that a Public Limited Company is a legal entity or legal person and has got right to manage its affairs in accordance with its memorandum of association or related rules. Being a legal entity, the company can take a decision to secure its interest by sending anyone on contract basis for higher education and training to abroad and after completion of training return back to the country and the person may join the company itself. Of course, the purpose of Section 40A is to prevent the abuse of fund by the company for personal interest. There should be dividing line between personal interest and the interest of the company. A personal interest means the expenditure incurred not....