The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the course fee paid to Harward Business School for the director is allowable as business expenses of the Company and therefore, eligible for deduction under the Income Tax Act, 1961.
The Director of the assessee Company, Income Cables Pvt Ltd., was looking after the functioning of the assessee Company. The Director joined to the course in Harward Business School and Management and the assessee Company has incurred the expenditure of Rs. 19,76,700/-. For the relevant year, the assessee-Company claimed deduction of such course fee paid.
The Assessing Officer held that the said expenditure is in the nature of personal expenses and the assessee has not substantiated the nexus of expenditure incurred with the business of the Assessee Company.
The Tribunal bench comprises Shri Am Alankamony, Accountant Member, and Sh. Yogesh Kumar U.S., Judicial Member found that undergoing such “Owner/President Management Program” course by a director of a company will certainly improve the management skill and decision making skill and also add to the competence as the Director of a company.
“Since the said director who was looking after the management of the Assessee, such Management program course will result in improvement of the management skill of the director and such skill and expertise acquired by the Director in the said course will ultimately of the use and benefit in day to day business of the assessee. The assessee is engaged in the business of manufacturing cables, using such skill and expertise acquired by the Director in the said course will ultimately improve the efficiency and productivity of the assessee. Therefore, in our opinion, the said amount of Rs.19,76,700/- is allowable expenses under the provisions of the Act. Accordingly, we allow the grounds taken by the assessee,” the Tribunal said.
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