whether expenditure for education in usa can be claimed as deduction under PGBP
P-A-W-A-N
(TAX - MANAGER AT GURGAON)
(541 Points)
Replied 12 December 2009
must clear the quetion first
Max Payne
(employed)
(2569 Points)
Replied 12 December 2009
First of all, is there a nexus between the education and the business?
Here is one case where there was no nexus and the amount was disallowed.
Is expenditure incurred by the assessee-company on the training of an employee allowable as deduction, if there is no business necessity for such training?
Silicon (
Relevant Section: 37
The Assessing Officer, in this case, disallowed the training expenses incurred by the assessee-company on the ground that such expenses were not related to the business of the assessee. The disallowance was upheld by the Tribunal on the following grounds –
(1) the expenses were incurred on an employee, who was the son of the director of a group company, for his higher education abroad;
(2) the business was not commenced by the end of the relevant previous year in respect of which such deduction was claimed;
(3) the employee had joined a full-time Master’s course of Engineering Degree in computer science, which cannot be considered as a training course. Therefore, it is not the case of sending an employee to acquire technical competency;
(4) no material or evidence or compelling reason was given as to how the higher studies are indispensable for the company;
(5) the assessee-company had received unsecured loan from a group company, in which the employee’s father was a director and it had utilised the said loan to meet the education expenses of the employee.
Hareesh H Sharma
(Cleared IPCC..now article)
(894 Points)
Replied 13 December 2009
True ..depends upon the nexus bw biz and the exp..so make it more clear friend
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