SOUJANYA COLOR PRIVATE LIMITED, MUMBAI V. DCIT CIRCLE-3, MUMBAI

ITA 2041/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4033 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2014-2015
• Appeal Filed On: 03-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VINOD KUMAR
• Assessee Lawyers: HIRAL D SEJPAL
• Keywords: Business expenditure; Rule of consistency; Additional evidence; Question of law
• Section: 143(3); 142(1); 37(1); 143(1); 250; 143(2); 13; 22; 37

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI PAWAN SINGH , J M & SHRI S . RIFAUR RAHMAN, AM ./ I.T.A. NO . 2041 / MUM/ 2018 ( / ASSESSMENT YEAR: 2014 - 15 ) SOUJANYA COLOR PVT. LTD. C - 35/36, TTC INDUSTRIAL AREA, MIDC PAWANE, NAVI MUMBAI - 400 705 / VS. DCIT CIRCLE - 3 ROOM NO. 2, B WING, 6 TH FLOOR, ASHAR IT PARK, ROAD, NO. L6 Z, WAGLE ESTATE , THANE - 400 604 ./ ./ PAN NO. A A MCS 0859 G ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : MS. HIRAL D. SEJPAL , AR / RESPONDENTBY : SHRI V. VINOD KUMAR , DR / DATE OF HEARING : 13.01.2020 / DATE OF PRONOUNCEMENT : 10.02.2020 / O R D E R PER S. RIFAUR RAHMAN (ACCOUNTANT MEMBER) : THE PRESENT A PPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMIS S IONER OF INCOME TAX (APPEALS) - 2 , PUNE , IN SHORT LD. CIT(A) D ATED 15.02 .18 FOR AY 2014 - 15 . 2 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. 2 . THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE C OMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF COLORANTS BOTH ARCHITECTURAL AS WELL AS INDUSTRIAL. IT IS ALSO INVOLVED IN TRADING OF GOODS AND PROVISION OF SERVICES WHICH ARE ANCILLARY TO ITS BUSINESS ACTIVITIES. THE ASSESSEE FILED ITS RETURN OF IN COME FOR TH E YEAR UNDER CONSIDERATION ON 28.11. 2014 DECLARING A TOTAL INCOME OF RS. 3,36,78,620/ - AND RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT. THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. NOTICES U/S 143(2) AND 142(1) WERE SERVED UPON THE ASSESSE E . IN RESPONSE , AR OF THE A SSESSEE ATTENDED AND FURNISHED THE DETAILS AS CALLED FROM TIME TO TIME. 3. DURING THE ASSESSMENT PROCEEDING, AO OBSERVED THAT ASSESSEE HAS CLAIMED TRAINING CHARGES AMOUNTING TO RS. 49,39,185/ - IN ITS FINANCIAL STATEMENT. WHEN THE DETAIL WAS CALLED FROM THE COMPANY, ASSESSEE HAS SUBMITTED THAT TRAINING EXPENSES WERE INCURRED IN RESPECT OF THE FOLLOWING PERSONS: - I) MS. PRIYAMVADA BHUMJKAR - MANAGING DIRECTOR II) MR. SRINIVASA RAO, HEAD OPERATIONS III) MR. JASHAN BHUMKAR, NON EXECUTI VE DIRECTOR. 3 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. 4. SINCE THE EXPENSES WERE INCURRED ON NON - EXECUTIVE DIRECTOR, THE SAME WAS ASKED TO SUBSTANTIATE. IN RESPONSE, ASSESSEE SUBMITTED THAT T HIS TRAINING CHARGES ARE ON ACCOUNT OF FINAL YEAR OF GRADUATION OF MR. JASHAN BHUMKAR WHO WAS THEN ASSOCI ATED IN THE CAPACITY OF NON - EXECUTIVE DIRECTOR OF THE COMPANY. HE WAS PURSUING GRADUATION IN THE FIELD OF ADVANCED CHEMICAL TECHNOLOGY AND WAS SPECIALIZING IN THE FIELD WHICH IS DIRECTLY RELEVANT TO THE BUSINESS OF THE COMPANY. THE ASSESSEE COMPANY FELT IT NECESSITY T O SPONSOR THE SAME AND RETAIN THE TALENT WITHIN THE ORGANIZATION FOR BETTER FUTURE PROSPECTS. HENCE, IT WAS UNANIMOUSLY DECIDED BY THE BOARD TO SPONSOR THE UNIVERSITY FEE FOR FINAL YEAR OF GRADUATION OF MR. JASHAN BHUMK AR AND THE COMPANY ENTERED INTO AND 'EDUCATION SPONSORSHIP AGREEMENT' WITH HIM FOR JOINING THE COMPANY FOR A MINIMUM PERIOD OF 3 YEARS AFTER COMPLETION OF HIS GRADUATION. ASSESSEE RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF M/S KOSTUB I NVESTMENT LTD VS C1T (1TA/2014). 5. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, AO REJECTED THE CONTENTION OF THE ASSESSEE AND DISALLOW THE ABOVE 4 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. EXPENDITURE TO THE EXTENT OF RS. 22,33,843 U/S 37 OF THE ACT BY TREATING IT NOT EXPENDED WHOLLY AND EX CLUSIVELY FOR THE PURPOSE OF BUSINESS. 6 . AGGRIEVED BY THE ABOVE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND FILED BEFORE HIM THE FOLLOWING SUBMISSION WHICH ARE REPRODUCED BELOW: - 6. IN THE COURSE OF APPELLATE PROC EEDING , THE APPELLANT RELIED ON THE STATEMEN TS FACTS WHICH READS AS UNDER: 'THE APP ELLANT C OMPANY I S ENGAGED IN THE BUSINESS OF MANUFACTURING OF COLORANTS BOTH ARCHITECTURAL AS WELL AS INDUSTRIAL. IT IS ALSO INVOLVED IN TRADING OF GOODS AND PROVISION OF SERVICES WHICH ARE ANCIL LARY TO ITS BUSINESS ACTIVITIES. THE APPELLANT FILED ITS RETURN OF LNCO ME FOR THE YEAR UNDER CONSIDERATION ON NOVEMBER 28, 2014 DECLARING A TOTAL INCOME OF RS. 3,36,78,620/ - . THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. NOTICES U/S 143(2)1142( 1) WERE SERVED UPON THE APPELLANT COMPANY. IN RESPONSE OF THE SAID NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT COMPANY ATTENDED AND FURNISHED THE DETAILS AS CALLED FROM TIME TO TIME. 5 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. AN ASSESSMENT WAS DONE U/S 1 43(3,) OF THE INCOME TAX ACT, 796 7 ('THE ACT') DETERMINING THE TOTAL INCOME AT RS. 3,59, 72,460. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 3, THANE (THEAO 1 ) DISALLOWED THE TRAINING EXPENSES WHICH WERE INCURRED BY THE APPELLANT COMPANY FOR THE DIRECTOR, NAMELY, MR. JASHAN BHUMKAR S UNIVERSITY FEE FOR GRADUA TION FROM BERKELEY UNIVERSITY OF CALIFORNIA. AS REGARDS GROUND NO. 1: THE APPELLANT COMPANY HAS INCURRED TRAINING CHARGES AMOUNTING TO RS. 49,39,185/ - IN THE YEAR UNDER CONSIDERATION OF WHICH RS. 22,33,843/ - HAVE BEEN SPENT FOR TH E EDUCATION FEES OF MR. JASHAN BHUMKAR, THE DIRECTOR OF THE APPELLANT COMPANY MR. JASHAN BHUMKAR IS A DIRECTOR OF THE APPELLANT COMPANY SINCE APRIL 15, 2010. HE WAS PURSUING GRADUATION IN THE FIELD OF ADVANCED CHEMICAL TECHNOLOGY AND WAS SPECIALIZING IN TH E FIELD WHICH IS DIRECTLY RELEVANT TO THE CURRENT BUSINESS OF THE APPELLANT COMPANY. IN THE AY 2014 - 15, THE APPELLANT COMPANY ENTERED INTO AN 'EDUCATION SPONSORSHIP AGREEMENT' WITH MR. JASHAN BHUMKAR AND AGREED TO PAY THE UNIVERSITY FEE FOR THE FINAL YEAR OF GRADUATION AND IN RETURN MR. 6 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. JASHAN BHUMKAR AGREED TO JOIN THE APPELLANT COMPANY FOR A MINIMUM PERIOD OF 3 YEARS AFTER COMPLETING HIS GRADUATION FROM THE BERKELEY UNIVERSITY OF CALIFORNIA. A BOARD RESOLUTION WAS PASSED APPROVING THE AGREEMENT ON MAY 30, 2013. MR. JASHAN BHUMKAR, AFTER COMPLETING HIS GRADUATION IN 2014, PURSUED MASTERED IN THE SAME FIELD AND ON ITS COMPLETION, HE STARTED WORKING WITH THE APPELLANT COMPANY FROM SEPTEMBER 21, 2015. THE EFFECT OF HIS EXPERTISE KNOWLEDGE CAN BE SEEN IN TERMS OF THE INCREASE IN PROFITS AND TURNOVER OF THE APPELLANT COMPANY WHICH SHOT UP FROM RS. 74 CRORE TO RS. 96 CRORE I.E. AN INCREASE BY 30%. THE PRODUCT PORTFOLIO OF THE COMPANY HAS EXPANDED BY THE ADDITION OF A PRODUCT I.E. COLOR COMPOSITE. THE COMPANY HAS A LSO EXPANDED ITS MARKET TO LATIN AMERICA AND THESE HAVE BEEN TAKEN CARE OF SOLELY BY MR. JASHAN BHUMKAR ON THE BASIS OF EXPERTISE GAINED. AS OF TODAY, MR. JASHAN BHUMKAR IS STILL WORKING ON A YEARLY REMUNERATION AND THE BENEFITS OF HIS EXPERTISE ARE BEING REAPED BY THE APPELLANT COMPANY. THE APPELLANT COMPANY SENDS ITS TALENTED EMPLOYEES FOR TRAINING SO THAT THEY CAN GAIN EXPERTISE KNOWLEDGE WHICH IN TURN IS BENEFICIAL FOR THE COMPANY'S PROSPECTS AND BRINGS ECONOMIC BENEFITS. IN 7 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. ADDITION TO THIS, THE APPELLANT COMPANY ALSO CONDUCTS TRAINING PROGRAMMES/SESSIONS FOR THE EMPLOYEES IN THE PREMISES OF THE COMPANY ITSELF. THE DETAILED SUMMARY OF TRAINING EXPENSES INCURRED BY THE APPELLANT COMPANY OVER A PERIOD OF TIME ARE AS FOLLOWS. SR. NO. A.Y. AMOUNT 1 2013 - 14 17,94,659 2 2014 - 15 49,39,184 3 2015 - 16 80,250 4 2016 - 17 66,070 FURTHER, ASSESSMENT FOR THE FY 2012 - 13 WAS CARRIED OUT, WHEREIN TRAINING EXPENSES WERE INCURRED FOR THE DIRECTOR OF THE COMPANY AND THE SAME WAS ALLOWED BY THE ASSESSING OFFICER. IN THE YEAR UNDER CONSIDERATION, TRAINING EXPENSES ARE INCURRED ON THE DIRECTOR AND HENCE, THE SAME SHOULD BE ALLOWED KEEPING IN VIEW THE PRINCIPLE OF CONSISTENCY. FURTHER, CONSIDERING THE FINANCIAL POSITION OF THE FAMILY OF MR. JASHAN BHUMKAR AND THEIR RETURNS FILED, THEIR ANNUAL WITHDRAWAL FOR THE AY 2014 - 15 IS - 8 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. APPROXIMATELY RS. 2 CRORE. THE EDUCATION FEES OFRS. 22,33,843/ - OF JASHAN BHUMKAR COULD HAVE BEEN EASILY SPENT BY HIS FAMILY, BUT SINCE THE KNOWLEDGE GAINED BY JASHAN BHUMKAR WAS IN THE INTEREST OF THE APPELLANT COMPANY, HIS EDUCATION FEES WERE SPONSORED BY THE COMPANY KEEPING IN MIND THE LONG - TERM PROSPECTS. THE COMPANY FOLLOWS A BLANKET POLICY IN THIS REGARD. AS REGARDS GROUND NO. 2: THE APPELLANT COMPANY, DURING THE ASSESSMENT PROCEEDINGS, HAD VERIFIED THE INVOICES, BOARD RESOLUTION AND THE 'EDUCATION SPONSORSHIP AGREEMENT' WITH THE AO, BUT THE SAME WAS NOT TAKEN ON RECORD BY THE AO. 7. LD. CIT(A) AFTER CONSIDERING SUBMISSION AND ADDITIONAL EVIDENCES SUBMIT TED BY THE A SSESSEE, SUSTAINED THE ADDITION MADE BY AO BY RELYING ON FOLLOWING CASE LAWS: - I) ECHJAY FORGINGS LTD. VRS. ACIT IN 328 ITR 286. II) MAC EXPLOTEC PVT. LTD. VRS. CIT IN 155 TAXMANN 247. III) CIT VRS. R.K.K.R. STEELS PVT. LTD. IN 258 ITR 306. IV) M. SUBRAMANIAM BROS. VRS. CIT IN 250 ITR 769. 9 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. 8. FURTHER LD. CIT(A) HAS COME TO THE CONCLUSION AS MENTIONED BELOW: - 11. IN THE LIGHT OF THE AFORESAID DISCUSSION ON THE FACTS OF THE CASE, PROVISION OF SECTION 37(1) OF THE IT ACT AS WELL AS DECISIONS CITED, I HOLD THAT THE APPELLANT COMPANY'' IS A CLOSELY HELD PVT. LTD. COMPANY AND THE RESOLUTION CAN BE PASSED AS DEEMED FIT WHICH BEST SUITS THE INTEREST OF THE MANAGEMENT. IN THE FACTS OF THE PRESENT CASE, RESOLUTION WAS PASSED AT THE INSTANCE OF THE MD WHO HAPPENS TO BE THE MOTHER OF MR. JASHAN BHUMKAR. THE POST OF NON - EXECUTIVE DIRECTOR HAS BEEN GIVEN TO MR. JASHAN BHUMKAR JUST TO CAMOUFLAGE THE CLAIM AS BUSINESS EXPENDITURE. THIS IS CERTAINLY NOT THE INTENT OF THE PROVISION OF SECTION 37(1) OF THE IT ACT. IT WAS CERTAINLY THE PERSONAL LIABILITY OF THE MOTHER WHO HAPPENS TO BE THE MD OF THE APPELLANT COMPANY FOR PROVIDING HIGHER EDUCATION TO HER SON WHICH HAS BEEN WRONGLY CLAIMED AS BUSINESS EXPENDITURE IN THE HANDS OF THE APPELLANT COMPANY. HENCE SUCH CLAIM CANNOT BE ALLOWED AND THEREFORE, IT IS HELD THAT THE CLAIM OF RS. 22,33,843/ - ON THE HIGHER EDUCATION OF MR. JASHAN BHUMKAR IS NOT A DEDUCTIBLE EXPENDITURE U/S 37(1) OF THE IT ACT AND SAME IS THEREFORE RIGHTLY DISALLOWED BY THE AO. THE DISALLOWANCE S O MADE IS THEREFORE CONFIRMED. 10 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. 12. IN THE RESULT, THE APPEAL IS DISMISSED. 9 . NOW BEFORE US, THE ASSESSEE HAS PREFE RRED THE APPEAL A GAINST THE ORDER OF LD. CIT(A) ON THE GROUNDS MENTIONED BELOW: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) - 2, PUNE, ('THE CIT(A)') ERRED IN UPHOLDING THE ACTION OF THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 3, THANE ('THE AO') IN DISALLOWING THE EXPENDITURE U/S 37(1) OF THE ACT INCURRED TOWARDS THE HIGHER EDU CATION OF THE DIRECTOR OF THE COMPANY. 2. THE APPELLANT PRAYS THAT THE AO BE DIRECTED TO ALLOW THE CLAIM OF TRAINING EXPENSES AMOUNTING TO RS. 22,33,843 AS CLAIMED BY THE APPELLANT COMPANY. GROUND NO. 2 THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER ANY/ OR AMEND THE FOREGOING GROUNDS OF APPEAL. 10 . BEFORE US, LD. AR BROUGHT TO OUR NO TICE THE FINDINGS OF LD. CIT(A)/ AO AND ALSO BROUGHT TO OUR NOTICE AT PAGE NO. 1 OF THE PAPER BOOK IN WHICH THE COMPANY HAS APPROVED THE EXPENDITURE 11 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. BY WAY OF RESOLUTION WHICH IS FILED IN THE PAPER BOOK. SHE FURTHER BROUGHT TO OUR NOTICE COPY OF EDUCATION SPONSORSHIP ARRANGEMENT WHICH IS PLACED AT PAGE NO. 2 AND SHE BROUGHT TO OUR NOTICE CLAUSE 1.1, 1.2, 4.3 AND 4.4 AND SUBMITTED THAT EXECUTIVE DIRECTOR HAS INCURRED ALL THE EXPE NDITUR E/ FEES OF GRADUATION AND ONLY FOR THE 3 RD YEAR OF GRADUATION, ASSESSEE C OMPANY HAS AGREED TO SPONSOR ONLY COLLEGE FEES WITH A CONDITION THAT SHRI JASHAN BHUMKAR WILL WORK WITH COMPANY FOR A PERIOD OF 3 YEARS AND ALSO AT THE TIME OF CHOOSING THE MAJO R SUBJECT, SHRI JASHAN BHUMKAR HAS SELECTED ADVANCE STUDY IN CHEMICALS, SINCE THE LINE OF THE BUSINESS OF THE ASSESSEE ALSO IN CHEMICAL FIELD. SHE FURTHER SUBMITTED THAT SHRI JASHAN BHUMKAR HAS JOINED THE COMPANY AFTER GRADUATION AND STILL SERVING AS DIREC TOR IN THE COMPANY , HOLDING AN IMPORTANT POSITION. SHE FURTHER SUBMITTED THAT LD. CIT(A) HAS RELIED UPON VARIOUS CASE LAWS, WHICH IS NOT RELEVANT TO THE FACTS OF THE PRESENT CASE AND SHE RELIED ON THE CASE LAW AS MENTIONED BELOW: - 11. SHE SUBMITTED THAT THE HONBLE HIGH COURTS HAS DISTINGUISHED THE CASE LAW RELIED BY LD. CIT(A) AND AS PER THE 12 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. FACTS OF THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF ASWATHANARAYANA & ESWARA VRS. DCIT (SUPRA), ONE OF THE PARTNER WENT FOR HIGHER STUDIES AND AFTER CO MPLETION OF THE HIGHER EDUCATION, THE PARTNER HAS JOINED THE COMPANY. 12. LD. AR FURTHER SUBMITTED THAT THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF M. SUBRAMANIAM BROS. VRS. CIT IN 250 ITR 769, THERE WAS NO COVENANT BY THE PARTNER SERVING THE FIRM AND FURTHER DISTINGUISHED THE CASE OF CIT VRS. R.K.K.R. STEELS PVT. LTD. IN 258 ITR 306, WHEREIN THERE WAS NO AGREEMENT BETWEEN THE COMPANY AND SON OF THE DIRECTOR WHO WAS SENT TO ABROAD AND ALSO THERE WAS NO REQUIREMENT TO JOIN THE COMPANY AFTER COM PLETING HIS EDUCATION. SHE SUBMITTED THAT IN THE GIVEN CASE OF THE ASSESSEE, ASSESSEE HAS ENTERED INTO AN AGREEMENT AND ALSO THERE IS A CONDITION THAT SON OF THE DIRECTOR WILL WORK FOR A MINIMUM PERIOD OF 3 YEARS IN THE COMPANY. SHE FURTHER SUBMITTED THAT LD. CIT(A) HAS OBSERVED THAT ASSESSEE HAS NOT GIVEN ANY OPPORTUNITY FOR FURTHER STUDIES TO ANY OTHER EMPLOYEES. SHE FURTHER SUBMITTED THAT ASSESSEE HAS GIVEN OPPORTUNITY TO OTHER SENIOR OFFICERS PARTICULARLY IN THIS ASSESSMENT 13 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. YEAR ITSELF AND SENIOR OFFICE R WAS ALSO SENT ABROAD FOR FURTHER STUDIES. THEREFORE, SHE PRAYED THAT ADDITION MADE BY THE AO BE DELETED. 13. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS PA SSED BY THE REVENUE AUTHORITIES AND SUBMITTED THAT IT IS ONLY A MAKE TO BELIEVE DOCUMENTS AGREE D BY THE ASSESSEE ONLY TO CLAIM THE ABOVE EXPENDITURE. 14 . CONSIDERED THE RIVAL SUBMISSION AND MATERIAL PLACED ON RECORD, WE NOTICE FROM THE RECORD THAT SHRI JASHAN BHUMKAR COMPLETED THE HIGHER EDUCATION WITH THE FINANCIAL ASSISTANCE OF THE ASSESSEE COMPA NY AND ASSESSEE COMPANY HAD INCURRED THE EDUCATION EXPENDITURE FOR THE LAST YEAR OF GRADUATION AND SHRI JASHAN BHUMKAR WAS WORKING IN THE COMPANY AS NON - EXECUTIVE DIRECTOR AT THE TIME OF AVAILING THE ABOVE BENEFIT. THE COMPANY HAS DECIDED TO APPROVE THE AB OVE EXPENDITURE BY PASSING A RESOLUTION IN THIS REGARD AND ENTERED INTO AN EDUCATION SPONSORSHIP AGREEMENT. AS PER THE ABOVE AGREEMENT SHRI JASHAN BHUMKAR HAS TO WORK WITH THE ASSESSEE COMPANY FOR A PERIOD OF 3 YEARS IN RETURN FOR THE ABOVE SAID SPONSORSHI P. LD. AR 14 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. SUBMITTED THAT SHRI JASHAN BHUMKAR HAS JOINED THE COMPANY IMMEDIATELY AFTER THE GRADUATION AND STILL SERVING IN THE COMPANY. THE ABOVE FACTS ARE MUTATIS MUTANDI TO THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CAS E OF A WATHANARAYANA & ESWARA V RS. DCIT (SUPRA), WHEREIN IT WAS HELD AS RELEVANT PARAS NO. 2, 3, 10 TO 28, WHICH IS MENTIONED BELOW: - 2.THE ASSESSEE IS A PROFESSIONAL FIRM OF CONSULTING ENGINEERS & ARCHITECTS. FOR THE ASSESSMENT YEAR 2001 - 02, THE APPELLANT FILED A RETURN OF INCOME ADMITTING LOSS OF RS.6,65,428/ - . THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) DETERMINING THE TOTAL ASSESSED LOSS AT RS.4,20,588/ - . T HE ASSESSING OFFICER DISALLOWED A SUM OF RS.2,65,588/ - BEING FOREIGN EDUCATION AND TRAINING EXPENSES OF PARTNER SHRI H.E.SRIPRAKASH SHASTRY AS BEING NOT RELATED TO THE BUSINESS OF THE FIRM AND IN DOING SO, FOLLOWED THE DECISION OF THIS COURT IN THE CASE OF M.SUBRAMANIAM BROS. VS. COMMISSIONER OF INCOME TAX REPORTED IN (2001) 250 ITR 0769 AND THE DECISION IN COMMISSIONER OF INCOME TAX VS. R.K.K.R STEELS REPORTED IN (2002) 258 ITR 0306. 15 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. 3.THE ASSESSEE CONT ENDED THAT MR.H.E.SRIPRAKASH SHASTRY IS THE SON OF SHRI.ESWARA, ONE OF THE PARTNERS OF THE FIRM, WHO HAD COMPLETED HIS B.E.CIVIL ENGINEERING IN THE YEAR 2000 AND BECAME A PARTNER OF THE FIRM IN APRIL 2000 AND HE WAS SENT TO THE UNIVERSITY OF NEW SOUTH WALE S, SYDNEY, AUSTRALIA DURING FEBRUARY 2001 FOR SPECIALIZING IN CONSTRUCTION MANAGEMENT AND UPON COMPLETION OF THE HIGHER EDUCATION TRAINING, THE SAID PARTNER IS CONTINUING WITH THE FIRM AND SPECIALIZED KNOWLEDGE AND TRAINING ACQUIRED BY HIM IN THE FIELD OF CONSTRUCTION OF MANAGEMENT IS OF IMMENSE BENEFIT TO THE FIRM IN ITS PROFESSIONAL ACTIVITIES. 10.AT THE FIRST BLUSH, THE CONTENTION ADVANCED BY THE LEARNED STANDING COUNSEL FOR THE REVENUE APPEARS TO BE IMPRESSIVE. HOWEVER, WE FIND THAT ON A CLOSER SCRUTINY INTO THE MATERIAL PAPERS, WHAT IS SOUGHT TO BE CHALLENGED BEFORE THIS COURT IS THE PERVERSITY IN THE FINDINGS OF THE CIT(A) AS WELL AS THE TRIBUNAL BY IGNORING MATERIAL FACTS, WHICH HAVE BEEN PLACED BEFORE THE TRIBUNAL AS WELL AS BEFORE THE CIT(A). THEREF ORE, WHEN THE GROUNDS CANVASSED BY THE ASSESSEE BY PLACING MATERIALS BEFORE THE ASSESSING OFFICER OR FOR THAT MATTER BEFORE THE CIT(A) WERE NOT TAKEN INTO CONSIDERATION, THEN IT GOES TO THE ROOT OF THE MATTER THEREBY, THE COURT WOULD BE EMPOWERED TO TEST T HE 16 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. CORRECTNESS OF THE IMPUGNED ORDERS AS TO WHETHER THE ORDER SUFFERED FROM NON - APPLICATION OF MIND OR FAILURE TO LOOK INTO THE MATERIAL INFORMATION PLACED BEFORE THE AUTHORITIES, WHICH WOULD AMOUNT TO AN ERROR OF LAW. THEREFORE, AFTER HEARING THE LEARNED COUNSEL FOR THE PARTIES ON THE FACTUAL ASPECTS, WE FIND THAT THIS APPEAL IS ENTERTAINABLE AND A SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION. 11.AS POINTED OUT EARLIER, THE ASSESSING OFFICER AS WELL AS THE CIT(A) AS WELL AS THE TRIBUNAL DID NOT GO INTO THE FACTUAL ASPECTS OF THE MATTER, THOUGH PLACED BEFORE THEM BY THE ASSESSEE. TWO DECISIONS OF THE HONBLE DIVISION BENCH OF THIS COURT IN R.K.K.R STEELS (SUPRA) AND M.SUBRAMANIAM BROS. (SUPRA) WERE RELIED ON TO SUPPORT THE DISALLOWANCE. IT HAS TO BE S EEN AS TO WHETHER THESE TWO DECISIONS CAN APPLY TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 12.INSOFAR AS M.SUBRAMANIAM BROS. (SUPRA) IS CONCERNED, THE SON OF THE ASSESSEE, WHO WENT ABROAD, WAS INITIALLY ADMITTED AS A PARTNER OF THE FIRM EVEN WHEN HE WAS A MINOR AND HAD A SHARE OF THE BENEFITS OF THE PARTNERSHIP, HE ATTAINED MAJORITY IN THE YEAR 1974 AND DID NOT TAKE ACTIVE PART IN THE BUSINESS OF THE FIRM, BUT CONTINUED HIS B.COM., STUDIES AND THEN COMPLETED M.COM. AFTER COMPLETING HIS STUDIES IN INDIA, HE WENT 17 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. ABROAD TO DO M.B.A. AND HE RETURNED TO INDIA IN THE YEAR 1979. ONLY AFTER HIS RETURN, HE APPEARS TO HAVE TAKEN SOME PART IN THE BUSINESS ACTIVITIES OF THE FIRM. TAKING NOTE OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE COURT HELD THAT THE EXPENDITU RE INCURRED BY THE ASSESSEE - FIRM ON HIGHER EDUCATION ABROAD OF ONE OF ITS PARTNERS, WHO WAS THE SON OF THE MAIN PARTNER, WAS NOT ALLOWABLE AS DEDUCTION AS THIS CANNOT BE REGARDED AS A DEPUTATION MADE BY THE FIRM IN CONNECTION WITH THE BUSINESS NOTWITHSTAND ING A COVENANT BY THE SAID PARTNER TO SERVE THE FIRM FOR A PERIOD OF FIVE YEARS. 13.IN THE CASE OF R.K.K.R STEELS (SUPRA), THE FACTS WERE THAT THE ASSESSEE WAS ENGAGED IN RE - ROLLING AND CLAIMED EXPENDITURE FOR MEETING THE COST OF TRAVEL TO USA AND THE EXPE NSES CONNECTED WITH THE EDUCATION OF THE SON OF THE DIRECTOR OF THE COMPANY, WHO HAD ACQUIRED AN M.B.A. DEGREE. THERE WAS NO AGREEMENT BETWEEN THE COMPANY AND SON BEFORE HE WAS SENT TO ABROAD. THERE WAS NO REQUIREMENT THAT HE SHOULD JOIN THE COMPANY AFTER COMPLETING HIS EDUCATION. IN THE SAID FACTS AND CIRCUMSTANCES OF THE CASE, THE COURT HELD THAT THE EXPENDITURE, WHICH A FATHER INCURS OUT OF HIS NATURAL LOVE AND AFFECTION FOR HIS CHILDREN IN MEETING THE COST OF THEIR EDUCATION, CANNOT BECOME A BUSINESS EX PENDITURE MERELY BECAUSE HE IS ALSO THE OWNER OR A 18 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. DIRECTOR OF A BUSINESS IN WHICH THE SON OF THE DAUGHTER SUBSEQUENTLY TAKES PART. 14.IN THE INSTANT CASE, WE FIND THAT SUBSTANTIAL FACTUAL MATERIAL WAS PLACED BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A) AND THE TRIBUNAL. TO THAT EXTENT, THE LEARNED COUNSEL FOR THE APPELLANT HAS FILED THE COPY OF THE WRITTEN SUBMISSIONS FILED BEFORE THE CIT(A). FROM THE FACTS PLACED, IT IS SEEN THAT THE ASSESSEES SON HAS COMPLETED HIS B.E. DEGREE IN APRIL 2000 A ND JOINED AS A PARTNER OF THE FIRM IN THE SAME MONTH. ALL THE PARTNERS OF THE FIRM, INCLUDING MR.H.E.SRIPRAKASH SHASTRY, WHO ARE ALL QUALIFIED ENGINEERS, WERE HAVING PLANS TO TAKE UP WORK WITH MULTINATIONALS, WHO WERE LOOKING AT INDIA FOR SETTING UP INDUST RIES. HENCE, THE PARTNERS CONSIDERED IT A PROFESSIONAL NECESSITY TO SEND MR.H.E.SRIPRAKASH SHASTRY TO AUSTRALIA TO SPECIALIZE IN THE FIELD OF CONSTRUCTION MANAGEMENT AT THE UNIVERSITY OF NEW SOUTH WALES. THIS SPECIALIZATION WAS DIRECTLY CONNECTED WITH PROF ESSION CARRIED ON BY THE ASSESSEE AND HE WAS SENT TO UNIVERSITY OF NEW SOUTH WALES IN FEBRUARY 2001. THE ASSESSEE FIRM STATED THAT FOREIGN HIGHER EDUCATION AND TRAINING OF ONE OF THEIR PARTNERS WILL HAVE AN ADVANTAGE IN OBTAINING PROFESSIONAL ASSIGNMENTS F ROM INDUSTRIAL PROJECTS PROMOTED WITH FOREIGN COLLABORATION. 19 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. 15.MATERIALS WERE PLACED BEFORE THE AUTHORITIES BELOW THAT AFTER THE PARTNER COMPLETED HIS STUDIES AND RETURNED BACK TO INDIA SEVERAL MULTINATIONAL CONTRACTS WERE ACQUIRED BY THE FIRM AS WELL AS MUCH PROFESSIONAL FEE WAS EARNED BY THE FIRM. THESE FACTS AND FIGURES WERE PLACED BEFORE THE TRIBUNAL AND THE AUTHORITIES AS WELL. UNFORTUNATELY, THE ASSESSING OFFICER DID NOT DEAL WITH ANY OF THE FACTUAL POSITION PLACED BY THE ASSESSEE FIRM, BUT WAS MEREL Y GUIDED BY THE FACT THAT IT IS THE SON OF ONE OF THE PARTNERS, WHO WAS SENT FOR HIGHER EDUCATION ABROAD AND THERE WAS NO AGREEMENT BETWEEN THE FIRM AND THE PARTNER THAT HE SHOULD WORK FOR THE FIRM AFTER COMPLETION OF THE COURSE. THE ASSESSING AUTHORITY LO ST SIGHT OF THE UNDISPUTED FACTUAL POSITION THAT THE PARTNER HAD RETURNED BACK TO THE FIRM AND CONTINUED TO WORK FOR THE FIRM, EVEN WHILE THE ASSESSMENT PROCEEDINGS WERE BEING DEALT WITH. THEREFORE, THERE IS GENUINITY AND BONAFIDE IN THE CLAIM OF THE ASSES SEE. 16.ADMITTEDLY, THE MATERIAL PLACED BY THE ASSESSEE BEFORE THE TRIBUNAL SHOWS THAT THERE WERE SUBSTANTIAL PECUNIARY ADVANTAGE EARNED ON THE PARTNER ACQUIRING A FOREIGN DEGREE THEREBY LEADING TO CONTRACTS WITH MULTINATIONALS SOME OF WHOM HAVE BEEN NAMED SUCH AS NOKIA AND LEIGHTON (INDIA) PRIVATE LIMITED, WHO APPOINTED THEM AS ARCHITECTS FOR THE PROJECTS NEAR 20 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. SRIPERUMBUDUR. ON THIS FACTUAL ISSUE, IT WOULD BE USEFUL TO REFER TO THE DECISION IN THE CASE OF SAKAL PAPERS PVT.LTD. VS. COMMISSIONER OF INCOME TA X REPORTED IN (1978) 114 ITR 0256, WHEREIN THE EDUCATIONAL EXPENDITURE OF THE DAUGHTER OF ITS DIRECTORS WERE HELD TO BE DEDUCTIBLE UNDER SECTION 37 OF THE ACT. LEARNED STANDING COUNSEL FOR THE REVENUE PO INTED OUT THAT IN THE SAID CASE PRIOR TO THE DAUGHTER BEING SELECTED AND SENT FOR EDUCATION ABOARD, FOR NEARLY 5 YEARS SHE HAS WORKED AS AN APPRENTICE IN THE FIRM. 17.IN OUR CONSIDERED VIEW, THE SON OF THE PARTNER HAD ALREADY BEEN INDUCTED AS A PARTNER OF THE FIRM BEFORE HE WAS SENT ABROAD, IN THE SENSE THAT PRIOR TO THE SON BEING SENT TO AUSTRALIA FOR HIGHER EDUCATION, HE HAD ALREADY BEEN INDUCTED AS A PARTNER AND THERE IS MATERIAL TO SHOW THAT ON HIS RETURN, THERE HAS BEEN VALUE ADDITION TO THE BUSINESS O F THE FIRM AND HE CONTINUED WITH THE FIRM AS ITS PARTNER. 18.THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO THE DECISION IN THE CASE OF COMMISSIONER OF INCOME TAX VS. KOHINOOR PAPER PRODUCTS REPORTED IN (1997) 226 ITR 0220 (M.P.). 21 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. 19.IN THE SAID CASE, THE COURT AFTER REFERRING TO SECTION 37(1) OF THE ACT HELD THAT THE EXPENDITURE INCURRED IN THE TRAINING WAS HELD TO BE ALLOWABLE DEDUCTION, AS IN THE SAID CASE ONE SHRI DEEPAK BHARGAVA WAS SENT TO U.S.A. FOR HIGHER EDUCATION, BUT IT WAS OBVIOUSLY FOR BUSINESS PURPOSES OF THE ASSESSEE FIRM AND HE STAYED ABROAD THOUGH FOR A LONG PERIOD, IT IS A FACT THAT AFTER COMPLETION OF HIS STUDIES, THE AFORESAID PERS ON KEPT HIMSELF ENGAGED IN THE BUSINESS OF THE FIRM AND THE EXPERIENCE GAINED BY HIM PROVED BENEFICIAL TO THE FIRM. 20.THE AFOREMENTIONED TWO DECISIONS, SAKAL PAPERS PVT.LTD. (SUPRA) AND KOHINOOR PAPER PRODUCTS (SUPRA), ARE CLEAR ANSWERS TO THE CONTENTIONS ADVANCED BY THE REVENUE. 21.THE LEARNED STANDING COUNSEL FOR THE REVENUE CONTENDED THAT IN THE DECISION IN THE CASE OF COMMISSIONER OF INCOME TAX AND ANOTHER VS. RAS INFORMATION TECHNOLOGIES (P) LTD . , REPORTED IN (2011) 200 TAXMAN 305 (KAR), THE MATERIAL ON RECORD DISCLOSED THAT THE SON OF THE MANAGING DIRECTOR ENTERED INTO AN AGREEMENT WITH THE ASSESSEE COMPANY, UNDER WHICH HE AGREED TO WORK FOR THE COMPANY ON COMPLETION OF HIS COURSE ABROAD AND EVEN WHILE PURSUING HIS POST - GRADUATION COURSE IN MANUFACTURING AND ENGINEERING ABROAD FOR WHICH FINANCIAL ASSISTANCE 22 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. WAS PROVIDED, HE KEPT THE COMPANY UPDATED ABOUT THE LATEST TRENDS AND DEVELOPMENTS IN THE FIELD AND WAS ALSO SENDING KEY INPUTS IN THE FORM OF ARTICLES, RESEARCH PAPERS ETC., TO ENABLE THE COMPANY TO KEEP ITSELF UPDATED OF THE TECHNICAL KNOW - HOW AND KNOWLEDGE. 22.AS POINTED OUT BY US EARLIER, SUBSTANTIAL FACTS WERE PLACED BEFORE THE THREE AUTHORITIES, WHO CONCURRENTLY IGNORED THE SAME, AS THERE IS NO CONSIDERABLE OR DISCUSSION ON THE SAME. IN FACT, THE TRIBUNAL DID NOT EVEN ATTEMPT TO EXAMINE THE SAID ISSUE, IN SPITE OF SPECIFIC GROUNDS BEING RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL THAT ABUNDANT MATERIAL WAS PLACED BEFORE THE ASSESSING OFFICER EXPLAINING THE NECESSITY OF FOREIGN EDUCATION AND TRAINING FOR PROFESSIONAL FIRM AND ITS USEFULNESS FOR THE FIRM AFTER THE PARTNER COMPLETED SPECIALIZED EDUCATION AND TRAINING AND CONTINUED TO SERVE THE FIRM AS A PARTNER. FURTHERMORE, THE ASSESSEE SPECIFI CALLY STATED THAT THE ASSESSING OFFICER AND THE CIT(A) DID NOT CHOOSE TO DISCUSS ANY OF THEM (MATERIALS PLACED), FOR THE REASONS BEST KNOWN TO THEM. WE ARE SATISFIED THAT THERE WAS SUBSTANTIAL FACTS PLACED BEFORE THE AUTHORITIES, WHICH WERE COMPLETELY IGNO RED. 23.AS POINTED OUT BY THE HON'BLE HIGH COURT OF DELHI IN KOSTUB INVESTMENT LTD. VS. DEPUTY COMMISSIONER OF 23 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. INCOME TAX [(2014) 365 ITR 0436 (DELHI)], THERE MIGHT BE A TENDENCY IN BUSINESS CONCERNS TO CLAIM DEDUCTIONS UNDER SECTION 37 , AND FOIST PERSONAL EXPENDITURE, BUT SUCH A TENDENCY ITSELF CANNOT RESULT IN AN UNSPOKEN BIAS AGAINST CLAIMS FOR FUNDING HIGHER EDUCATION ABROAD OF THE EMPLOYEES OF T HE CONCERN. 24.WE HAVE EXAMINED THE FACTS PLACED BEFORE THE LOWER AUTHORITIES AND WE FIND THAT THE ASSESSEE IS A PARTNERSHIP FIRM CONSISTING OF TWO BROTHERS, TWO SONS OF ONE BROTHER. ALL THE FOUR PARTNERS ARE DULY QUALIFIED ENGINEERS (B.E.) AND THE FIRM IS CARRYING ON ENGINEERING CONSULTANCY PROFESSION FOR LEADING INDIAN CORPORATE CLIENTS. ONE OF THE PARTNER'S SON, MR.H.E.SRIPRAKASH SHASTRI, JOINED THE FIRM IN APRIL 2000 AFTER COMPLETING HIS B.E., DEGREE. HE HAD TAKEN ACTIVE PART IN THE CONDUCT OF THE BUSIN ESS OF THE FIRM FROM THE DATE OF HIS INDUCTION AS PARTNER. EVEN WHILE DOING HIS B.E. DEGREE COURSE, HE IS STATED TO HAVE BEEN ATTENDING THE OFFICE OF THE FIRM AND GETTING ACQUAINTED WITH REINFORCED CONCRETE DESIGN, PLANNING ESTIMATES AND CONSTRUCTION MANAG EMENT. AFTER GRADUATION, HE WAS MADE A WORKING PARTNER OF THE FIRM AND HE HAS WORKED ON SEVERAL PROJECTS, WHICH HAVE BEEN MENTIONED BY THE ASSESSEE. IN FEBRUARY 2001, HE WAS SENT TO AUSTRALIA FOR HIGHER EDUCATION. THE DURATION OF THE COURSE AND TRAINING IS FOR A PERIOD OF TWO SEMESTERS 24 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. AND THE COURSE UNDERWENT WAS DIRECTLY RELATED TO THE PROFESSION CARRIED ON BY THE FIRM AND THIS ACCRUED IN FAVOUR OF THE FIRM, AS COULD BE SEEN FROM THE FACTS PLACED BEFORE THE CIT(A), WHERE THE PROFESSIONAL FEE RECEIVED BY T HE FIRM HAD SUBSTANTIALLY INCREASED. 25.ON RETURN, AFTER COMPLETION OF THE POST GRADUATE DEGREE, THE PARTNER CONTINUED TO WORK FOR THE FIRM AND MATERIALS WERE PLACED TO SHOW THAT SEVERAL IMPORTANT CONTRACTS HAVE BEEN SECURED BY THE FIRM, WHICH THEY ATTRIBU TE TO THE EDUCATIONAL QUALIFICATION AND EXPERTISE ACQUIRED BY THE PARTNER OF THE FIRM ABROAD. THERE WAS NO MATERIAL PLACE BY THE REVENUE TO DEMONSTRATE THAT ANY PART OR WHOLE OF THE STAND TAKEN BY THE ASSESSEE WAS EITHER FALSE OR UNTRUE. VIEWED FROM THIS A NGLE, THIS COURT IS FULLY SATISFIED THAT THIS IS NOT A CASE WHERE THERE IS A MISUSE OF THE PROVISION OF SECTION 37 OF THE ACT TO FOIST A PERSONAL EXPENDITURE AS A BUSINESS EXPENDITURE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE EXPENDITURE WAS ALLOWABLE AND THE AUTHORITIES CONCURRENTLY ERRED IN NOT TAKING INTO CONSIDERATION THE FACTUAL POSITION PLACED, IN SPITE OF SPECIFIC GROUNDS RAISED BEFORE THE TRIBUNAL, WHICH WOULD RENDER THE DECISION PERVERSE . 26.THE LEARNED STANDING COUNSEL FOR THE REVENUE POINTED OUT THAT NO GROUND HAS BEEN RAISED BY THE 25 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. ASSESSEE STATING THAT THE FINDING RENDERED BY THE ASSESSING OFFICER, CIT(A) AND THE TRIBUNAL ARE PERVERSE. 27.PERUSAL OF THE GROUNDS OF APPEAL FILED BEFORE THE CIT(A) SHOWS THAT THE ASSESSEE HAS SPECIFICALLY RAISED THE POINT REGARDING NON - CONSIDERATION OF THE MATERIALS PLACED BEFORE THE ASSESSING AUTHORITY. YET THE CIT(A) DID NOT MAKE AN ENDEAVOUR TO EXAMINE THE STAND TAKEN BY THE ASSESSEE, RESULTED IN NON - CO NSIDERATION OF THE MATERIALS PLACED. THIS UNDOUBTEDLY WOULD BE PERVERSITY WRIT LARGE ON THE FACE OF THE ORDERS PASSED BY THE ASSESSING OFFICER AND THE CIT(A). THEREFORE, IN OUR CONSIDERED VIEW, THE ASSESSEE CANNOT BE NON - SUITED MERELY BECAUSE, HE HAS NOT U SED THE EXPRESSION PERVERSE IN THE GROUNDS OF APPEALS BEFORE THE CIT(A) AS WELL AS BEFORE THE TRIBUNAL. THERE IS NO DISPUTE RAISED BY THE REVENUE WITH REGARD TO THE FACTUAL POSITION THAT THE CONCERNED PARTNER WENT ABROAD FOR COMPLETION OF THE HIGHER STUDIE S/EDUCATION AND ON HIS RETURN CONTINUED WITH THE FIRM. NON - CONSIDERATION OF THE FACTUAL ISSUES, WHICH ARE GERMANE AND WHICH OUGHT TO HAVE BEEN CONSIDERED, LEADS TO PERVERSITY. THUS, THE TRIBUNAL COMMITTED SERIOUS ERROR OF LAW THEREBY VITIATING THE ENTIRE P ROCEEDINGS MORE PARTICULARLY, THE ASPECTS WHICH GOES TO THE ROOT OF THE MATTER. 26 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. 28.THUS, FOR THE ABOVE REASONS, WE ARE OF THE CONSIDERED VIEW THAT THE AUTHORITIES CONCURRENTLY COMMITTED SERIOUS ERROR OF LAW AND FAILED TO ADDRESS THE ISSUES WHICH OUGHT TO H AVE BEEN ADDRESSED, IGNORED MATERIALS WHICH OUGHT TO HAVE BEEN CONSIDERED AND APPLIED THE DECISIONS WHICH ARE WHOLLY DISTINGUISHABLE ON FACTS. 15. WE ALSO NOTICE THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF SAKAL PAPERS (P.) LTD. VRS. CIT (SUPRA) HAS ALSO DECIDED THE SIMILAR FACTS TO THE PRESENT CASE. 16 . T HEREFORE , IN OUR CONSIDERED VIEW IN THE GIVEN CASE, ASSESSEE HAS SPONSORED THE EDUCATION OF SON OF THE M.D. WHAT IS RELEVANCE, WHET HER THE PERSON WHO WAS SPONSORED, IS RELEVANT FOR THE EXISTING BUSINESS AND WHETHER THE BUSINESS BENEFITTED. IF IT IS YES, THEN IT IS VALID BUSINESS EXPENDITURE AND RESPECTFULLY FOLLOWING THE AFORESAID DECISION S W HICH IS APPLICABLE MUTATIS MUTANDIS IN THE PRESENT CASE, WE ARE INCLINED TO ACCEPT THE SUBMISSION OF LD. AR. ACCORDINGLY , WE ALLOW THE GROUND S RAISED BY THE ASSESSEE. 27 I.T.A. NO. 2041 /MUM/201 8 SOUJANYA COLOR PVT. LTD. 17 . IN THE NET RESULT, THE APPEAL FILED BY THE ASSESSEE STA NDS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH FEB 2020 . SD/ - SD/ - (PAWAN SINGH ) (S. RIFAUR RAHMAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 10 . 02 .2020 SR.PS. DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI