1977 (11) TMI 36

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....n this reference. The assessee is a private limited company publishing a leading Marathi newspaper in Poona. The company at the relevant period was a closely-held company and its directors (and we are informed, the only two share-holders) were Dr. and Mrs. N. B. Parulekar. The dispute giving rise to this reference relates to the expenditure incurred by Miss Leela Parulekar, daughter of these two directors, on her education in U.S.A. Miss Parulekar is a Master of Arts of the Poona University with English and French as special subjects. She worked in the editorial department of the paper from September, 1955, starting as an apprentice, on a salary of Rs. 50 per month. On 24th March, 1960, the directors of the company passed a resolution th....

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....kar would not have been sent abroad. According to him, further, when facilities for such education are available in India, it could not be held to be expedient from a businessman's point of view to incur such large expenditure on foreign education. According to him, further, as the paper was a Marathi newspaper, her proficiency in the two languages in which she has specialised for her M. A. degree and her further foreign training could not be regarded as very useful for the paper. According to him, therefore, the expenditure was not incurred for the company's business but was only an amenity granted to a relation of the directors. In appeal, the Appellate Assistant Commissioner agreed with the view expressed by the Income-tax Officer tha....

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.... on her training without obliging her to undertake service of the company clearly smacked of extra-commercial consideration. It is on these facts that the following question has been referred to us : " Whether, on the facts and in the circumstances of the case, the expenditure incurred on the foreign education of Miss Parulekar was allowable at a deduction in determining the business profits of the company for the assessment year 1961-62 ? " On the facts found by the Tribunal, the following position emerges : (1) That Prior to her being selected Miss Parulekar had for nearly five years worked on the paper, starting as an apprentice ; (2) The Tribunal has found--and this finding is binding on us--that the selection was proper ....