SHRI HARSHVARDHAN JOHARI, JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, JAIPUR

ITA 654/JPR/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3149 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 08-08-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA CIT A
• Assessee Lawyers: DILEEP SHIVPURI
• Keywords: Business income; Business expenditure; Search and seizure; Commercial expediency; Capital expenditure; Set aside
• Section: 143(3); 153A; 37(1); 143(1); 143(2); 9(1); 9(1); 9(1); 13; 37; 132; 28; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S A, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 654/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2010-11 SHRI HARSHVARDHAN JOHARI T-2 PALLAVI APARTMENT, OPP. LAXMI VILAS HOTEL, TONK ROAD, JAIPUR. CUKE VS. THE DCIT, CENTRAL CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AFVPJ 2660 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI DILEEP SHIVPURI (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDER MEHTA (CIT) A LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 17/12/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 11/03/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-4, JAIPUR DATED 26.05.2017 FOR ASSESSMENT YE AR 2010-11 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND S OF APPEAL:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS)-4, JAIPUR HAS ERRED IN NOT QUASHING TH E ASSESSMENT ORDER PASSED BY DCIT, CENTRAL CIRCLE-3, JAIPUR U/S 143(3) R.W.S. 153A OF THE IT ACT, 1961 WHICH IS ILLEGAL AND BAD I N LAW. ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 2 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(APPEALS)-4, JAIPUR HAS ERRED IN CONFIRMING THE ADDITION OF RS. 1,11,35,190/- MADE BY DCIT, CENTRAL CIRCLE-3 ON ACCOUNT OF EDUCATION EXPENSES INCURRED BY THE APPELLANT ON HIM SELF. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME ON 10.10.2010 DECLARING TOTAL INCOME OF RS. 54,94,370/-. SUBSEQUENTLY, A SEARCH AND SEIZURE OPERATION U/S 132 OF THE IT ACT WAS CARRIED OUT ON 05.09.2011 IN CASE OF JOHARI GROUP TO WHICH THE ASSESSEE BELONGS. PURSUANT TO NOTICE U/S 153A OF THE ACT, THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING INCOM E OF RS. 54,94,370/- AS ORIGINALLY DECLARED IN THE RETURN FILED U/S 13 9(1) OF THE ACT. DURING THE COURSE OF PROCEEDINGS, ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT OF M/S HARSHVARDHAN, A PROPRIETORSHIP CONCERN OF THE A SSESSEE, IT WAS FOUND BY THE ASSESSING OFFICER THAT THE ASSESSEE HA S CLAIMED AN AMOUNT OF RS. 1,11,35,190/- TOWARDS EDUCATION EXPEN SES AND A SHOW CAUSE WAS ISSUED AS TO WHY THE SAID EXPENSES SHOULD NOT BE DISALLOWED. 3. IN RESPONSE, THE ASSESSEE SUBMITTED THAT THE SAI D CLAIM TOWARDS EDUCATION EXPENSES IS IN RESPECT OF A COURSE IN BU SINESS MANAGEMENT PURSUED BY HIM FROM CASS BUSINESS SCHOOL, LONDON TO ACQUIRE BUSINESS ACUMEN IN MANAGEMENT, MARKETING, HUMAN RECOURSE MAN AGEMENT, FINANCE AND ACCOUNT ETC. WHICH HELP IN CONDUCTING H IS BUSINESS MORE EFFICIENTLY, ACCORDINGLY THE EXPENDITURE INCURRED I S WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND IS ALLO WABLE U/S 37(1) OF THE ACT. ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 3 4. THE REPLY SO FILED WAS NOT FOUND ACCEPTABLE TO T HE ASSESSING OFFICER AS THE EXPENSES SO CLAIMED WERE FOUND TO HA VE NO NEXUS WITH THE ASSESSEES BUSINESS AND ARE OF PERSONAL IN NATU RE THEREFORE, THE AMOUNT OF RS. 1,11,35,190/- WAS DISALLOWED AND ADDE D TO THE TOTAL INCOME OF THE ASSESSEE AND ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S 153A OF THE ACT VIDE ORDER DATED 10.03.2015 A T TOTAL ASSESSED INCOME OF RS. 1,66,29,560/-. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD. CIT(A). IT WAS CONTENDED BEFORE THE LD. CIT(A) THAT THE ASSESSING OFFICER HAS ERRED IN DISALLOWANCE OF EDUC ATION EXPENSES AS NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH PROCEEDINGS AND THE ASSESSMENT PROCEEDING WERE NOT ABATED BESIDES SUBM ISSIONS ON MERITS OF THE CASE. 6. AS PER THE LD. CIT(A), THE ACTION OF THE ASSESSI NG OFFICER WAS JUSTIFIED AS THE ORIGINAL RETURN FILED ON 10.10.201 0 U/S 139 OF THE ACT WAS ONLY PROCESSED U/S 143(1) AND PROCESSING U/S 14 3(1) IS NEITHER ASSESSMENT NOR COMPLETED ASSESSMENT, THEREFORE, IT IS NOT A CASE OF ABATED ASSESSMENT AS PER THE PROVISIONS OF SECTION 153A OF THE ACT ON MERITS. THE LD. CIT(A) FURTHER HELD THAT THE ASSESS EE WAS PURSUING B.SC(HONS) IN BUSINESS MANAGEMENT FROM CASS BUSINES S SCHOOL, LONDON DURING THE YEAR 2006-09 AND M.SC IN FINANCE FROM IMPERIAL COLLEGE OF LONDON IN THE YEAR 2010-2011 WHICH IS NO T SPECIALIZED COURSE PER SE MEANT FOR THE TRADING OF BULLION AND BASE METALS. FURTHER, IT WAS HELD BY THE LD CIT(A) THAT EVERY CLAIM OF DEDUCTION CANNOT BE ALLOWED U/S 37 OF THE ACT AS THE ASSESSEES CLAIM FALLS UND ER THE CATEGORY OF ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 4 PERSONAL IN NATURE AND THE ASSESSEE HAS ALSO FAILED TO PROVIDE DIRECT NEXUS BETWEEN THE GENERAL BUSINESS MANAGEMENT COURS ES PURSUED AND TRADING OF BULLION AND BASE METAL BUSINESS. ACCORDI NGLY, THE ADDITION MADE BY THE ASSESSING OFFICER WAS CONFIRMED. AGAIN ST THE SAID FINDINGS, THE ASSESSEE IS NOW IN APPEAL BEFORE US. 7. REGARDING GROUND NO. 1, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT WAS THE STAND OF THE ASSESSEE BEF ORE THE CIT(A) THAT SINCE NO INCRIMINATING MATERIAL WAS FOUND DURI NG THE COURSE OF SEARCH, THERE COULD NOT HAVE BEEN ANY ADDITION M ADE AND THE THE RETURNED INCOME SHOULD BE ACCEPTED. IN SUPPORT, RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS NAMELY, CIT V . CONTINENTAL WAREHOUSING CORPORATION [2015] 93 CCH 0048 (BOM), P CIT V. DIPAK PANCHAL [2017] 98CCH 0074 (GUJ), PCIT V. DEVA NGI ALIAS RUPA [2017] 98 CCH 0051 (GUJ) AND CIT V. KABUL CHAW LA [2016] 380 ITR 573 (DEL). 8. IT WAS SUBMITTED THAT THE LD CIT(A) POINTED OUT THAT IN THE CASE OF KABUL CHAWLA, THE EARLIER ASSESSMENT WAS CO MPLETED U/S 143(3) WHILE IN THE PRESENT CASE, IT WAS ONLY PROCE SSED U/S 143(1) OF THE ACT. HE DREW SUPPORT FROM THE FOLLOWING DECI SIONS NAMELY, CIT V CHETAN DAS LACHMAN DAS [2012] 254 CTR 392 (DE LHI), CIT V. ANIL KUMAR BHATIA [2013] 352ITR 493 (DELHI) AND SUN NY JACOB JEWELLERS AND WEDDING CENTRE V. DY. CIT [2014] 362 ITR 664 (KER). 9. IT WAS SUBMITTED BY THE LD AR THAT THE FACT AS T O WHETHER THE EARLIER ASSESSMENT WAS COMPLETED U/S 143(3) OR U/S 143(1) OF ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 5 THE I.T. ACT IS NOT MATERIAL TO THE ISSUE AT HAND. IT DOES NOT, IN ANY WAY, AFFECT THE LEGAL PROPOSITION THAT IF NO IN CRIMINATING DOCUMENT HAS BEEN FOUND DURING SEARCH, NO ADDITION CAN BE MADE, AND THE RETURNED INCOME HAS TO BE ACCEPTED. A TTENTION IS DRAWN TO THE DECISION OF THE DELHI HIGH COURT IN TH E CASE OF PCIT V. MEETA GUTGUTIA (2017) 395 ITR 526 (DELHI) WHEREIN IT WAS HELD THAT INVOCATION OF SECTION 153A TO REOPEN CONC LUDED ASSESSMENTS OF ASSESSMENT YEARS EARLIER TO YEAR OF SEARCH IS NOT JUSTIFIED IN ABSENCE OF INCRIMINATING MATERIAL QUA EACH OF THE ASSESSMENT YEARS. IT WAS SUBMITTED THAT SLP AGAINST THIS DECISION OF THE DELHI HIGH COURT WAS DISMISSED BY THE HON'BL E SUPREME COURT IN PCIT V. MEETA GUTGUTIA [2018] 257 TAXMAN 441 (SC). RELIANCE WAS ALSO PLACED ON THE DECISION OF THE JODHPUR TRIBUNAL IN THE CASE OF DY. CIT V. PACIFIC INDUSTRIES LTD. [2019] 111 TAXMANN.COM 32 (JODHPUR-TRIB.) WHEREIN ALSO THE SAME SENTIMENTS HAVE BEEN EXPRESSED. IN VIEW OF THE CASES CITED ABOVE, IT WAS SUBMITTED THAT THE ASSESSMENT FRAMED BY MAKING AN ADDITION U/ S 153A WHEN NO INCRIMINATING DOCUMENT WAS FOUND DURING SEA RCH, SHOULD BE SET ASIDE AND THE AO DIRECTED TO COMPLETE THE ASSESSMENT AT THE RETURNED INCOME. 10. REGARDING GROUND NO. 2, IT WAS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE THAT ON MERITS, THIS ADDITION WAS CONF IRMED BY THE LD. CIT(A) ON TWO GROUNDS- THAT INTEREST PAID ON EDUCAT ION LOAN IS A SPECIFIC DEDUCTION, AND THAT NO BUSINESS PURPOSE IS SERVED BY OBTAINING A B.SC. (HONS) DEGREE IN BUSINESS MANAGEM ENT AND M.SC. IN FINANCE , AND THIS EXPENDITURE FALLS IN THE CATEGOR Y OF PERSONAL EXPENSE. ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 6 IT WAS SUBMITTED THAT THE QUESTION OF TAKING A LOAN AND CLAIMING DEDUCTION ON THE INTEREST PAID ON THAT LOAN DOES NO T ARISE IN THE PRESENT CASE AS THE ASSESSEE HAS SPENT HIS OWN MONE Y ON EDUCATION PURPOSES. THEREFORE, THERE IS NO QUESTION OF CLAIMING DEDUCTION ON INTEREST PAID. THE LD CIT(A) SEEMS TO HAVE MIXED UP THE FACTS OF THIS CASE AND THE REASON GIVEN BY HIM IS FALLACIOUS, BASED ON WRONG FACTS, AND IS ACCORDINGLY TO BE DISM ISSED. 11. IT WAS SUBMITTED THAT THE SECOND ARGUMENT OF TH E LD. CIT(A) IS EQUALLY FALLACIOUS SINCE BUSINESS MANAGEM ENT IS A COURSE THAT IS EXTREMELY USEFUL FOR FURTHERANCE AND GROWTH OF ANY BUSINESS, LEAVE ASIDE THE ASSESSEE'S BUSINESS. NO WORTHWHILE ARGUMENT HAS BEEN ADVANCED BY THE LD. CI T(A) AS TO WHY HE HAS TREATED THIS EXPENSE AS A PERSONAL EXPEN SE. IT HAS BEEN HELD IN A PLETHORA OF JUDGMENTS THAT ANY EXPEN SE THAT GOES TOWARDS BETTER UNDERSTANDING AND/OR MANAGEMENT OF O NE'S BUSINESS IS AN EXPENSE ALLOWABLE U/S 37 OF THE I.T ACT. IT HAS ALSO BEEN HELD THAT IT IS NOT FOR THE AO TO STEP INTO TH E SHOES OF A BUSINESSMAN AND DICTATE TO HIM HOW HE SHOULD RUN HI S BUSINESS. IN SUPPORT, RELIANCE WAS PLACED ON THE FOLLOWING DE CISIONS NAMELY, CIT V. KOHINOOR PAPER PRODUCTS [1997] 92 TA XMAN 316 (MP), MALLIGE MEDICAL CENTRE (P) LTD. V. JT. CIT [2 015] 61 TAXMANN.COM 298 (KAR), KOSTUB INVESTMENT LTD. V CIT [2014] 45 TAXMANN.COM 123 (DELHI), CIT V. NAIDUNIA NEWS & NET WORKING P. LTD. [2012] 23 TAXMANN.COM 422(MP), HINDUSTAN HOSIERY INDUSTRIES V. FIRST ITO [1983] 5 ITD 349 (BOM TRIB.) AND 209 I TR 383 (BOM), AND KASHIRAM RADHEKRISHAN V. CIT [1985] 155 ITR 609 (RA J). ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 7 IN VIEW OF THE ABOVE, IT WAS SUBMITTED THAT THE EXP ENSES ON EDUCATION OF THE APPELLANT IS DRIVEN BY COMMERCIAL EXPEDIENCY AND IS WHOLLY AND SOLELY FOR FURTHERANCE OF THE BUS INESS OF THE ASSESSEE. HENCE, THESE EXPENSES MAY BE ALLOWED. 12. THE LD. CIT DR IS HEARD WHO HAS RELIED ON THE O RDER OF THE LOWER AUTHORITIES AND SUBMITTED THAT ONCE A SEARCH U/S 13 2 IS CARRIED OUT, IT IS INCUMBENT UPON THE AO TO ASSESS OR REASSESS THE INC OME OF THE ASSESSEE IN RESPECT OF SIX ASSESSMENT YEARS IMMEDIA TELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THE AO HAD NO DIS CRETION BUT TO ASSESS OR REASSESS THE TOTAL INCOME OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 153A OF THE ACT. IT WAS FURTH ER SUBMITTED THAT THE EDUCATIONAL EXPENSES ARE PURELY PERSONAL IN NATURE AND NO NEXUS HAS BEEN ESTABLISHED BY THE ASSESSEE WITH HIS BUSINESS ACTIVITIES AND THUS, THE DISALLOWANCE HAS BEEN RIGHTLY MADE AND CONFIRME D BY THE LD CIT(A). HE ACCORDINGLY SUPPORTED THE ORDER OF THE LOWER AUT HORITIES. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. A SEARCH AND SEIZURE ACTION WA S CARRIED OUT IN CASE OF THE ASSESSEES GROUP ON 5.09.2011. THE ORIGINAL RETURN OF INCOME FOR THE FINANCIAL YEAR 2009-10 RELEVANT TO IMPUGNED ASS ESSMENT YEAR 2010- 11 WAS FILED ON 10.10.2010 AND THE LAST DAY OF ISSU ING NOTICE SECTION 143(2), BEING SIX MONTHS FROM THE END OF THE FINANC IAL YEAR IN WHICH RETURN HAS BEEN FILED, HAS NOT EXPIRED ON THE DATE OF SEARCH I.E. 5.09.2011. THUS, IT IS CLEAR THAT THE ASSESSMENT PR OCEEDINGS WERE PENDING AS ON 5.09.2011 I.E. THE DATE OF SEARCH AS THE TIME LIMIT FOR ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 8 ISSUANCE OF NOTICE U/S 143(2) HAS NOT EXPIRED. AS P ER SECTION 153A OF THE ACT, ONCE A SEARCH AND SEIZURE ACTION IS CARRIE D OUT, THE AO HAS TO ASSESS OR REASSESS THE TOTAL INCOME OF THE ASSESSEE IN RESPECT OF 6 YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR REL EVANT TO THE PREVIOUS YEAR IN WHICH A SEARCH IS CONDUCTED OR REQ UISITION IS MADE. IN CASE THE ASSESSMENT IS PENDING ON THE DATE OF SEARC H, THE SAME SHALL BE ABATED AS PER PROVISO TO U/S 153A(1) OF THE ACT AND THE AO IS FREE TO ASSESS THE INCOME OF THE ASSESSEE AS REGULAR ASSESS MENT. HOWEVER, IN CASE OF COMPLETED ASSESSMENT AND NOT ABATED DUE TO INITIATION OF SEARCH U/S 132 OR MAKING OF REQUISITION U/S 132A, T HE AO HAS TO REASSESS THE TOTAL INCOME OF THE ASSESSEE AND THERE FORE, THE ASSESSMENT ALREADY COMPLETED CAN BE TINKERED WITH O R DISTURBED WHERE ANY INCRIMINATING MATERIAL IS FOUND AND SEIZED DURI NG THE COURSE OF SEARCH OR REQUISITION AS CASE MAY BE INDICATING UND ISCLOSED INCOME OF THE ASSESSEE. THEREFORE, IT IS A SETTLED LEGAL PREP OSITION THAT IN CASE OF COMPLETED ASSESSMENT, THE SCOPE AND JURISDICTION OF THE AO TO REASSESS THE TOTAL INCOME OF THE ASSESSEE U/S 153A IS LIMITE D ONLY TO THE EXTENT OF THE INCOME DISCLOSED BY THE INCRIMINATING MATERI AL FOUND AND SEIZED DURING THE SEARCH AND SEIZURE ACTION. HOWEVER, IN R ESPECT OF THE PENDING ASSESSMENTS WHICH SHALL BE ABATED AS PER PR OVISO TO U/S 153A(1) OF THE ACT, THE AO IS FREE TO ASSESS THE IN COME OF THE ASSESSEE AS PART OF REGULAR ASSESSMENT AND THERE IS NO REQUI REMENT THAT THE SAME SHALL BE BASED ON INCRIMINATING MATERIAL FOUND AND SEIZED DURING THE SEARCH AND SEIZURE ACTION. IN THE INSTANT CASE, WHERE THE ASSESSMENT PROCEEDINGS WERE PENDING AT THE TIME OF SEARCH, WE THEREFORE DONOT FIND ANY LEGAL INFIRMITY IN ACTION OF THE ASSESSING OFFICER IN ASSESSING THE INCOME OF THE ASSESSEE BY MAKING T HE DISALLOWANCE OF ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 9 EDUCATION EXPENSES U/S 37(1) BASED ON ENQUIRES COND UCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, GROUN D NO. 1 OF THE ASSESSEES APPEAL IS DISMISSED. 14. NOW COMING TO THE MERITS OF ADDITION MADE BY TH E ASSESSING OFFICER. AS PER LD CIT(A), THE ASSESSEE WAS PURSUI NG B.SC(HONS) IN BUSINESS MANAGEMENT FROM CASS BUSINESS SCHOOL, LOND ON DURING THE PERIOD 2006-09 AND M.SC IN FINANCE FROM IMPERIAL CO LLEGE OF LONDON DURING THE PERIOD 2010-2011 WHICH ARE NOT SPECIALIZ ED COURSES PER SE MEANT FOR THE TRADING OF BULLION AND BASE METALS. F URTHER, IT WAS HELD BY THE LD CIT(A) THAT EVERY CLAIM OF DEDUCTION CANNOT BE ALLOWED U/S 37 OF THE ACT AS THE ASSESSEES CLAIM FALLS UNDER THE CAT EGORY OF PERSONAL IN NATURE AND THE ASSESSEE HAS ALSO FAILED TO PROVIDE DIRECT NEXUS BETWEEN THE GENERAL BUSINESS MANAGEMENT COURSES PURSUED AND TRADING OF BULLION AND BASE METAL BUSINESS. AS PER THE LD COUN SEL, IT HAS BEEN HELD IN A PLETHORA OF JUDGMENTS THAT ANY EXPENSE THAT GO ES TOWARDS BETTER UNDERSTANDING AND/OR MANAGEMENT OF ONE'S BUSINESS H AS THE DESIRED NEXUS WITH HIS BUSINESS AND IS AN EXPENSE ALLOWABLE U/S 37 OF THE ACT. IT HAS ALSO BEEN HELD THAT IT IS NOT FOR THE AO TO STEP INTO THE SHOES OF A BUSINESSMAN AND DICTATE TO HIM HOW HE SHOULD RUN HI S BUSINESS. 15. THE QUESTION FOR CONSIDERATION THEREFORE IS WHE RE THE ASSESSEE, AN INDIVIDUAL, WHO IS ENGAGED IN THE BUSINESS OF TR ADING IN BULLION AND BASE METAL THROUGH HIS SOLE PROPRIETORSHIP CONCERN, INCURS EXPENDITURE ON HIS OWN EDUCATION WHEREBY HE PURSUES GRADUATE I. E, B.SC (HONS) COURSE IN MANAGEMENT DURING THE PERIOD 2006-09 AND POST GRADUATE COURSE I.E, M.SC DURING 2010-11, WHETHER SUCH EXPEN DITURE CAN BE ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 10 ALLOWED AS EXPENDITURE INCURRED WHOLLY AND EXCLUSIV ELY FOR THE PURPOSES OF HIS BUSINESS FOR THE IMPUGNED ASSESSMENT YEAR 20 10-11 OR THE SAME IS IN NATURE OF PERSONAL EXPENDITURE, WHICH IS NOT ALLOWABLE WHILE COMPUTING TAXABLE BUSINESS INCOME FROM SUCH SOLE PR OPRIETORSHIP CONCERN, IN TERMS OF PROVISIONS OF SECTION 37 OF TH E ACT WHICH READS AS UNDER: 37. (1) ANY EXPENDITURE (NOT BEING EXPENDITURE OF THE NATURE DESCRIBED IN SECTIONS 30 TO 36 AND NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE OR PERSONAL EXPENSES OF THE ASS ESSEE), LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURP OSES OF THE BUSINESS OR PROFESSION SHALL BE ALLOWED IN COMPUTIN G THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUS INESS OR PROFESSION'. 16. IN CASE OF KOHINOOR PAPER PRODUCTS (SUPRA), ON E OF THE PARTNERS OF THE ASSESSEE FIRM, AFTER OBTAINING M.SC DEGREE, PROCEEDED TO USA FOR HIGHER STUDIES AND JOINED WEST ERN MICHIGON UNIVERSITY AND THE EXPENSES INCURRED ON HIS EDUCATI ON WERE CLAIMED AS SPENT ON FOREIGN TOUR EXPENSES. THE SAME WAS DIS ALLOWED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A). ON APPEAL, THE TRIBUNAL ALLOWED THE DEDUCTION OF ENTIRE EXPENDITUR E AND IN THAT CONTEXT, THE HONBLE MADHYA PRADESH HIGH COURT HAS HELD AS UNDER: 8. IN THE INSTANT CASE, THE TRIBUNAL CONCLUDED THA T AFTER COMPLETION OF STUDIES, THE AFORESAID PERSON KEPT HI MSELF ENGAGED IN THE BUSINESS OF THE FIRM AND HIS HIGHER EDUCATION IN USA AND THE EXPERIENCE GAINED BY HIM, PROVED BEN EFICIAL TO THE FIRM. THE TRIBUNAL FOUND THAT THE SUBSEQUENT EV ENTS ALSO ESTABLISHED THE INTENTION AND PURPOSE OF SENDING HI M TO RETURN WITH BETTER EDUCATION AND GREATER EXPERIENCE. ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 11 9. WE ARE SATISFIED THAT THE TRIBUNAL COMMITTED NO ERROR IN REACHING THE CONCLUSION WHICH IS NOT SHOWN TO BE PE RVERSE IN ANY MANNER. WE FIND THAT THE EXPENDITURE SO INCURR ED WAS NOT IN THE NATURE OF CAPITAL EXPENDITURE OR FOR PER SONAL PURPOSES. IT WAS EXPENDED WHOLLY AND EXCLUSIVELY F OR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THAT BEING SO, SUCH AMOUNT WAS PROPERLY ALLOWED IN COMPUTING THE INCOME CHARGEABLE UNDER SECTION 28 OF THE ACT. 17. IT IS THUS SEEN THAT IN THE AFORESAID CASE, THE ASSESSEE IS AN EXISTING PARTNERSHIP FIRM WHICH WAS CARRYING ON BUS INESS AND ONE OF ITS PARTNERS WHO HAS ACQUIRED BASIC EDUCATION IN FI ELD OF B.SC AND M.SC AND WAS WORKING WITH THE FIRM HAS PROCEEDED AB OARD FOR HIGHER STUDIES AND AFTER COMPLETION OF STUDY, HE HA S COME BACK AND HIS EDUCATION EXPERIENCE PROVED BENEFICIAL TO THE F IRM. IN THE INSTANT CASE, WE FIND THAT THE FACTS ARE DISTINGUISHABLE AN D THEREFORE, THE DECISION DOESNT SUPPORT THE CASE OF THE ASSESSEE. AS SUBMITTED BY THE ASSESSEE BEFORE THE LD CIT(A) AND AS WE HAVE NO TED ABOVE, WE FIND THAT THE ASSESSEE JOINED THE GRADUATION COURSE DURING THE PERIOD 2006-07 AND HE CONTINUED PURSUING THE SAID C OURSE FOR A PERIOD OF THREE YEARS FROM 2006 TO 2009 AND HAS CLA IMED TO HAVE STARTED THE BUSINESS OF BULLION AND BASE METAL TRAD ING FROM THE ASSESSMENT YEAR 2009-10 ONWARDS. SO WE FIND THAT EV EN PRIOR TO THE START OF HIS BUSINESS, THE ASSESSEE HAD JOINED THE BASIC GRADUATION COURSE, THEREFORE, AT THE RELEVANT POINT OF TIME WH EN THE EXPENDITURE WAS INCURRED, AT LEAST DURING THE FIRST TWO YEARS OF THE ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 12 BASIC GRADUATION COURSE, THE BUSINESS OF THE ASSESS EE WAS NOT EVEN SET-UP AND COMMENCED ITS OPERATIONS. THEREFORE, THE VERY BASIS OF CLAIMING THE WHOLE EXPENDITURE FOR THE 3 YEARS GRAD UATION COURSE IN THE YEAR UNDER CONSIDERATION IS NOT CLEAR WHERE THE BUSINESS OF THE ASSESSEE HAS NOT EVEN STARTED AND THEREFORE, THE QU ESTION OF ESTABLISHING NEXUS WITH HIS BUSINESS DOESNT ARISE FOR CONSIDERATION. FURTHER, IT IS UNCLEAR AS TO HOW THE WHOLE OF EXPEN DITURE FOR THREE YEARS GRADUATION COURSE HAS BEEN CLAIMED DURING THE YEAR UNDER CONSIDERATION AS TYPICALLY, THE COURSE FEE IS DEPOS ITED AT THE BEGINNING OF THE ACADEMIC SESSION AND TWO OF THE AC ADEMIC YEARS CLEARLY FALLS PRIOR TO YEAR UNDER CONSIDERATION. F URTHER, POST GRADUATE COURSE I.E, M.SC IN FINANCE WAS PURSUED DURING THE PERIOD 2010-11. IT IS AGAIN UNCLEAR AS TO HOW THE ASSESSEE WAS RUNNING HI S BUSINESS AND AT THE SAME TIME, PURSUING THE COURSE. FURTHER, WHAT IS THE BASIS OF CLAIM OF SUCH AN EXPENDITURE DURING THE IMPUGNED ASSESSME NT YEAR I.E, 2010- 11 WHERE THE CLAIM PRIMA FACIE SUGGEST THAT IT RELA TES TO SUBSEQUENT ASSESSMENT YEAR 2011-12 GOING BY THE FACT THAT THE COURSE WAS PURSUED DURING THE PERIOD 2010-11 WHICH FALLS UNDER THE ASS ESSMENT YEAR 2011- 12. ANOTHER DISTINGUISHING FEATURE IS THAT IN CASE OF KOHINOOR PAPER PRODUCTS, IT WAS A CASE OF A PARTNERSHIP FIRM WHERE THE CONCERNED PARTNER HAD ALREADY COMPLETED HIS GRADUATION AND PO ST-GRADUATION AND FOR PURSUING FURTHER STUDIES, HE WAS SENT ABROA D, HOWEVER, IN THE INSTANT CASE, THE ASSESSEE IS AN INDIVIDUAL AND FOR PURSUING THE GRADUATION COURSE, HE HAS SPENT THE MONEY WHICH IS MORE LIKE LAYING THE FOUNDATION FOR HIS OWN FUTURE CAREER AND IS THU S CLEARLY IN THE REALM OF PERSONAL EXPENDITURE RATHER THAN EXPENDITU RE IN THE REALM OF BUSINESS EXPENDITURE WHERE THE BUSINESS HAS NOT BEEN SET-UP AND ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 13 THUS, THE QUESTION OF ALLOWABILITY OF THE SAME UNDE R SECTION 37 DOESNT ARISE FOR CONSIDERATION. WHAT IS THEREFORE RELEVANT IS NOT JUST THE ULTIMATE BENEFIT OR UTILIZATION OF SUCH EX PENDITURE FOR BUSINESS PURPOSES BUT WHAT IS EQUALLY RELEVANT IS T HAT THE POINT IN TIME WHEN THE EXPENDITURE WAS INCURRED, THE BUSINES S OF THE ASSESSEE SHOULD HAVE BEEN SET UP WHICH HOWEVER, IS NOT THE CASE IN THE INSTANT CASE. 18. LOOKING AT THE MATTER FROM PERSPECTIVE OF ALLOW ABILITY UNDER SECTION 35D, WE FIND THAT EVEN THE PROVISIONS OF SE CTION 35D DOESNT COME TO THE AID OF THE ASSESSEE. THE PROVISIONS OF SECTION 35D WHICH TALKS ABOUT EXPENDITURE BEFORE COMMENCEMENT O F BUSINESS, THOUGH APPLIES EQUALLY TO AN ASSESSEE, BEING A COMP ANY AND AN ASSESSEE, OTHER THAN A COMPANY, HOWEVER, IT TALKS A BOUT SPECIFIED CATERGORIES OF EXPENDITURE AS DEFINED IN SUB-SECTIO N 2 TO SECTION 35D AND THE PRESENT EXPENDITURE IN FORM OF EDUCATIO N EXPENDITURE DOESNT FALL IN SUCH SPECIFIED EXPENDITURE. 19. ONCE THE BUSINESS HAS BEEN SET UP EVEN THOUGH I N AN INDIVIDUAL SOLE PROPERTERSHIP CAPACITY AND THEREAFT ER, WHERE THE ASSESSEE WISHES TO PURSUE HIGHER STUDIES WITH AN OB JECTIVE OF GAINING ENHANCED KNOWLEDGE WHICH WILL EVENTUALLY HE LP HIM IN ADVANCEMENT OF HIS BUSINESS, ONE MAY ARGUE THAT THE EXPENDITURE HAS THE NEXUS WITH HIS BUSINESS AND IS THUS A BUSIN ESS EXPENDITURE EVEN THOUGH AS PART OF SUCH AN EXERCISE, HE IS GAIN ING PERSONAL KNOWLEDGE, ENHANCES HIS SKILLS AND EXPERIENCE, AND ADDS TO HIS INTANGIBLES AND CURRICULUM VITAE . THE REASON FOR THE SAME IS THAT ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 14 THE PRIME MOTIVE FOR INCURRING SUCH AN EXPENDITURE WILL BE TO AID AND ENHANCEMENT THE BUSINESS ACTIVITIES BY VIRTUE OF SU CH KNOWLEDGE, AND AS PART OF THE SAME, WHERE THE ASSESSEE ADDS TO HIS PERSONAL INTANGIBLES, THE SAME WILL NOT RESULT IN RE-CHARACT ERISING THE BUSINESS EXPENDITURE AS PERSONAL IN NATURE. HOWEVER, THIS IS NOT THE CASE BEFORE US AS AT THE RELEVANT POINT OF TIME WHEN THE EXPENDITURE WAS INCURRED, THE BUSINESS OF THE ASSESSEE HAS NOT EVEN STARTED. HOWEVER, THE SAME MAY BE RELEVANT IN CONTEXT OF POS T GRADUATE COURSE I.E, M.SC IN FINANCE WHICH WAS PURSUED DURIN G THE PERIOD 2010- 11 AND THEREFORE, RELEVANT FOR SUBSEQUENT ASSESSMEN T YEAR AND NOT FOR THE IMPUGNED ASSESSMENT YEAR WHICH THE ASSESSEE MAY PURSUE, IF SO ADVISED. 20. NOW, COMING BACK TO ANOTHER DECISION RELIED UPO N BY THE LD AR IN CASE OF NAIDUNIA NEWS AND NETWORKING (P) LTD. (SUPRA). IN THAT CASE, FACTS OF THE CASE WERE THAT THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF PRINTING AND DISTRIBUTIO N OF NEWSPAPERS AND MAGAZINES. THE ASSESSEE CLAIMED EXPENSES ON FOR EIGN TRAVELLING AND HIGHER STUDIES IN PRINTING TECHNOLOGY FOR ONE O F ITS EMPLOYEES WHO WAS WORKING AS AN ASSISTANT MANAGER (PRINTING) WHO WAS ALSO SON OF EX-DIRECTOR OF THE COMPANY. THE TRIBUNAL ALL OWED THE CLAIM OF THE ASSESSEE HOLDING THAT THE PERSON WAS AN EMPLOYE E OF THE ASSESSEE AND HE WAS SENT ABROAD TO ACQUIRE THE ADVA NCE KNOWLEDGE OF LATEST PRINTING TECHNOLOGY WHICH WAS DIRECTLY RE LATED WITH THE BUSINESS OF THE ASSESSEE COMPANY. IN THAT FACTUAL B ACKGROUND, THE HONBLE MADHYA PRADESH HIGH COURT AFFIRMED THE FIND ING OF THE TRIBUNAL AND HELD THAT THE TRIBUNAL HAS RECORDED A FACTUAL FINDING ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 15 THAT THE PERSON WAS IN EMPLOYMENT WITH THE COMPANY NOT ONLY BEFORE GOING BUT EVEN DURING THE PERIOD, HE WAS UND ERTAKING STUDY IN PRINTING TECHNOLOGY AT LONDON AND HAS ALSO RETUR NED FROM LONDON. IT WAS ACCORDINGLY HELD THAT THE EXPENDITUR E IN QUESTION WAS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSIN ESS OF THE ASSESSEE COMPANY. AS WE HELD ABOVE, WHAT IS THEREFO RE RELEVANT IS NOT JUST THE ULTIMATE BENEFIT OR UTILIZATION OF SUC H EXPENDITURE FOR BUSINESS PURPOSES BUT WHAT IS EQUALLY RELEVANT IS T HAT THE POINT IN TIME WHEN THE EXPENDITURE WAS INCURRED, THE BUSINES S OF THE ASSESSEE SHOULD HAVE BEEN SET UP. IN THE INSTANT C ASE, THE ASSESSEE HAS NOT EVEN STARTED HIS BUSINESS WHEN WE JOINED THE B.SC (HONS) COURSE AND THEREFORE, THE EXPENDITURE RELATI NG TO THE PERIOD PRIOR TO THE START OF THE BUSINESS CANNOT BE ALLOWE D AND THAT TOO, IN THE IMPUGNED ASSESSMENT YEAR. THEREFORE, THIS DECI SION AGAIN DOES NOT SUPPORT THE CASE OF THE ASSESSEE. 21. IN CASE OF KOSTUB INVESTMENT LTD. (SUPRA), THE ASSESEE COMPANY INCURRED EXPENDITURE ON HIGHER EDUCATION ON AN EMPLOYEE, WHO HAPPENS TO BE THE SON OF ONE OF THE DIRECTORS OF THE ASSESSEES COMPANY, FOR UNDERTAKING AN MBA COURSE IN UK. THE ASSESSEE EXPLAINED TO THE AO THAT THE SAID PERSON WAS A GRAD UATE HAVING COMPLETED HIS B.SC (HONS) FROM DELHI UNIVERSITY AND WORKING WITH IT FOR A SALARY OF RS 10,000 AND SINCE HE WAS A BRILLI ANT STUDENT, AND THE COMPANY WAS IN NEED OF MANAGER (MARKETING) WHO COULD STUDY THE MOOD OF INVESTMENT MARKET AND THE PROSPECTS TAK ING INTO CONSIDERATION THE ECONOMY OF INDIA AND OTHER ADVAN CED COUNTRIES AND ALSO AN INDIVIDUAL WHO COULD ALSO TAKE DECISION S WITH RESPECT TO ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 16 INVESTMENT IN SHARES AND SECURITIES, THE BOARD OF D IRECTORS IN THE MEETING HELD ON 10.02.2005 TOOK A CONSCIOUS DECISIO N TO SEND HIM PURSUING THE COURSE OF MBA FROM UK AND ON COMING BA CK TO INDIA AFTER COMPLETING OF STUDY, HE WILL SERVE THE COMPA NY AT LEAST FOR 5 YEARS AND IN THE EVENT OF BREACH OF BOND, SUITABLE ACTION FOR RECOVERY OF THE AMOUNT WOULD BE TAKEN AGAINST HIM. IN THAT FACTUALLY BACKGROUND, THE HONBLE DELHI HIGH COURT HAS HELD AT PARA 8 TO 10 OF ITS ORDER WHICH READS AS UNDER:- 8. THIS COURT HAS CONSIDERED THE MATERIALS ON RECO RD. THERE CAN BE NO DOUBT THAT THE BURDEN OF SHOWING THAT EXPENDI TURE WOULD BE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINE SS UNDER SECTION 37(1) IS UPON THE ASSESSEE AND THAT PERSONA L EXPENDITURE CANNOT BE CLAIMED AS BUSINESS EXPENDITURE. THE QUES TION IS WHETHER THESE TWIN REQUIREMENTS ARE SAID TO HAVE BE EN SATISFIED IN THE CIRCUMSTANCES OF THIS CASE. THE FIRST IS WHA T ARE THE MATERIALS ON RECORD? THE ASSESSEE FURNISHED ITS RES OLUTION AUTHORIZING DISBURSEMENT OF THE EXPENSES TO FUND DU SHYANT PODDARS MBA. IT SECURED A BOND FROM HIM, BY WHICH HE UNDERTOOK TO WORK FOR FIVE YEARS AFTER RETURN WITHI N A SALARY BAND AND HE HAD IN FACT WORKED AFTER GRADUATING FROM THE UNIVERSITY FOR ABOUT A YEAR BEFORE STARTING HIS MBA COURSE. IN NATCO EXPORTS (SUPRA), THE STUDENT HAD APPLIED DIRECTLY WHEN SHE WAS PURSUING HER GRADUATION. THERE WAS A SEAMLESS TRANSITION AS IT WERE BETWEEN THE CHOSEN SUBJECT OF HER UNDERGRADUATE COU RSE AND THAT WHICH SHE CHOSE TO PURSUE ABROAD. IN THE PRESE NT CASE, THE FACTS ARE DIFFERENT. DUSHYANT PODDAR WAS A COMMERCE GRADUATE. THE ASSESSEES BUSINESS IS IN INVESTMENTS AND SECUR ITIES. HE WISHED TO PURSUE AN MBA AFTER SERVING FOR AN YEAR W ITH THE COMPANY AND COMMITTED HIMSELF TO WORK FOR A FURTHER FIVE YEARS AFTER FINISHING HIS MBA. THERE IS NOTHING ON RECORD TO SUGGEST THAT SUCH A TRANSACTION IS NOT HONEST. FURTHERMORE, THE OBSERVATION IN NATCO EXPORTS (SUPRA) WITH RESPECT TO A POLICY APPE ARS TO HAVE ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 17 BEEN MADE IN THE GIVEN CONTEXT OF THE FACTS. THE CO URT WAS CONSIDERABLY SWAYED BY THE FACT THAT THE DIRECTORS DAUGHTER PURSUED HIGHER STUDIES IN RESPECT OF A COURSE COMPL ETELY UNCONNECTED WITH THE BUSINESS OF THE ASSESSEE. SUCH IS NOT THE CASE HERE. DUSHYANT PODDAR NOT ONLY WORKED BUT AS STATED EARLIER HIS CHOSEN SUBJECT OF STUDY WOULD AID AND ASSIST THE COMPANY AND IS AIMED AT ADDING VALUE TO ITS BUSINES S. 9. WHILST THERE MAY BE SOME GRAIN OF TRUTH THAT THE RE MIGHT BE A TENDENCY IN BUSINESS CONCERNS TO CLAIM DEDUCTIONS U NDER SECTION 37, AND FOIST PERSONAL EXPENDITURE, SUCH A TENDENCY ITSELF CANNOT RESULT IN AN UNSPOKEN BIAS AGAINST CLAIMS FOR FUNDI NG HIGHER EDUCATION ABROAD OF THE EMPLOYEES OF THE CONCERN. A S TO WHETHER THE ASSESSEE WOULD HAVE SIMILARLY ASSISTED ANOTHER EMPLOYEE UNRELATED TO ITS MANAGEMENT IS NOT A QUESTION WHICH THIS COURT HAS TO CONSIDER. BUT THAT IT HAS CHOSEN TO FUND THE HIGHER EDUCATION OF ONE OF ITS DIRECTORS SONS IN A FIELD INTIMATELY CONNECTED WITH ITS BUSINESS IS A CRUCIAL FACTOR THA T THE COURT CANNOT IGNORE. IT WOULD BE UNWISE FOR THE COURT TO REQUIRE ALL ASSESSEES AND BUSINESS CONCERNS TO FRAME A POLICY W ITH RESPECT TO HOW EDUCATIONAL FUNDING OF ITS EMPLOYEES GENERALLY AND A CLASS THEREOF, I.E. CHILDREN OF ITS MANAGEMENT OR DIRECTO RS WOULD BE DONE. NOR WOULD IT BE WISE TO UNIVERSALIZE OR RATIO NALIZE THAT IN THE ABSENCE OF SUCH A POLICY, FUNDING OF EMPLOYEES OF ONE CLASS UNRELATED TO THE MANAGEMENT WOULD QUALIFY FOR DED UCTION UNDER SECTION 37(1). WE DO NOT SEE ANY SUCH INTENT IN THE STATUTE WHICH PRESCRIBES THAT ONLY EXPENDITURE STRICTLY FOR BUSINESS CAN BE CONSIDERED FOR DEDUCTION. NECESSARILY, THE DECISION TO DEDUCT IS TO BE CASE-DEPENDENT. 10. IN VIEW OF THE ABOVE DISCUSSION, HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE, THIS COURT IS OF THE OPI NION THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE TO FUND THE HIG HER EDUCATION OF ITS EMPLOYEE TO THE TUNE OF RS.23,16,942/- HAD A N INTIMATE AND DIRECT CONNECTION WITH ITS BUSINESS, I.E. DEALING I N SECURITY AND ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 18 INVESTMENTS. IT WAS, THEREFORE, APPROPRIATELY DEDUC TIBLE UNDER SECTION 37(1). 22. IN THE AFORESAID CASE, THE EMPLOYEE WAS WORKING WITH THE ASSESSEE COMPANY AND WENT ABROAD FOR PURSUING MBA C OURSE WHICH THE COURT HELD TO HAVE AN INTIMATE AND DIRECT CONNE CTION WITH THE ASSESSEES BUSINESS. HOWEVER, THE FACTS ARE CLEARL Y DISTINGUISHABLE IN THE INSTANT CASE, WHERE THE ASSESSEE PURSUED THE GRADUATION COURSE WHEN EVEN THE BUSINESS HAS NOT STARTED AND W HAT TO SPEAK ABOUT INTIMATE CONNECTION WITH THE BUSINESS. THUS, THIS DECISION AGAIN DOESNT SUPPORT THE CASE OF THE ASSESSEE. 23. IN CASE OF MALLIGE MEDICAL CENTRE (P.) LTD.(SUP RA), THE ASSESSEE COMPANY CLAIMED A SUM OF RS. 5,00,000/- SP ENT ON THE EDUCATION OF DAUGHTER OF THE MANAGING DIRECTOR OF T HE COMPANY. IT WAS SUBMITTED THAT SHE WAS COMMITTED TO WORK FOR TH E ASSESSEE AFTER SUCCESSFUL COMPLETION OF HER STUDIES AND AFTE R SUCCESSFUL COMPLETION OF STUDIES, SHE CAME BACK AND WORKED IN THE ASSESSEE COMPANY. SHE WAS PAID A SUM OF RS. 20,000/- PER MO NTH AS SALARY BEFORE SHE WAS SENT FOR HIGHER STUDIES AND AFTER RE TURNING, SHE IS BEING PAID RS. 30,000/- PER MONTH. IN THAT FACTUAL BACKGROUND, THE HONBLE KARNATAKA HIGH COURT HAS HELD AS UNDER:- 6. IN THE INSTANT CASE, BEFORE EXPENDITURE WAS INC URRED, THE DAUGHTER HAD ACQUIRED A DEGREE IN MEDICINE. SHE WAS EMPLOYED. APART FROM THE FACT THAT SHE IS THE DAUGHTER OF THE MANAGING DIRECTOR AND THE CHIEF EXECUTIVE, SHE WAS AN EMPLOY EE OF THE ASSESSEE. SHE WAS SENT OUTSIDE THE COUNTRY FOR ACQU IRING HIGHER EDUCATIONAL QUALIFICATION, WHICH WOULD IMPROVE THE SERVICES, ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 19 WHICH THE ASSESSEE IS GIVING TO ITS PATIENTS. IT IS IN THIS CONTEXT, THE SUM OF RS.5,00,000/- IS SPENT. THAT IS NOT IN D ISPUTE. AFTER ACQUIRING THE DEGREE, SHE HAS COME BACK AND SHE IS WORKING WITH THE ASSESSEE. SHE WAS PAID RS.20,000/- PER MONTH AS SALARY, BEFORE SHE WAS SENT TO HIGHER EDUCATION AND AFTER R ETURNING SHE IS BEING PAID RS.30,000/- PER MONTH. MERELY BECAUSE SHE HAPPENS TO BE THE DAUGHTER OF THE MANAGING DIRECTOR AND THE CHIEF EXECUTIVE, IT CANNOT BE SAID THAT THE MONEY I S SPENT BY HER PARENTS OUT OF LOVE AND AFFECTION FOR HIGHER EDUCAT ION OF THEIR DAUGHTER. SHE WAS AN EMPLOYEE OF THE ASSESSEE, IN T HE FIELD, IN WHICH, SHE HAS ACQUIRED DEGREE. THEY WANTED HER TO SPECIALIZE IN RADIOLOGICAL INVESTIGATIONS AND THEREFORE, SHE WAS SENT ABROAD FOR ACQUIRING THE KNOWLEDGE. AFTER ACQUIRING THE AD DITIONAL KNOWLEDGE, SHE HAS COME BACK AND SHE IS WORKING WIT H THE ASSESSEE. THEREFORE, THERE IS A DIRECT NEXUS BETWEE N THE EXPENSES INCURRED TOWARDS HER EDUCATION, WITH THE B USINESS, WHICH THE ASSESSEE IS CARRYING ON. IN THAT VIEW OF THE MATTER, FOLLOWING THE AFORESAID JUDGMENT, WE HEREBY SET-ASI DE THE IMPUGNED ORDERS PASSED BY ALL THE THREE AUTHORITIES AND DIRECT THE ASSESSING AUTHORITY TO ALLOW DEDUCTION OF THE S AID EXPENSES. THE SUBSTANTIAL QUESTIONS OF LAW IS ANSWERED IN FAV OUR OF THE ASSESSEE AND AGAINST THE REVENUE. 24. IN THE AFORESAID CASE, IT IS AGAIN A CASE OF AN EXISTING EMPLOYEE WHICH HAS ACQUIRED THE BASIC DEGREE AND THE COMPANY WHICH IS ENAGED IN MEDICAL BUSINESS WANTED HER TO SPECIALIZE IN RAD IOLOGICAL INVESTIGATIONS AND THEREFORE, SHE WAS SENT ABROAD F OR ACQUIRING THE KNOWLEDGE. THE FACTS ARE AGAIN CLEARLY DISTINGUISHA BLE IN THE INSTANT CASE, WHERE THE ASSESSEE PURSUED THE GRADUATION COU RSE WHEN EVEN THE BUSINESS HAS NOT STARTED AND WHAT TO SPEAK ABOU T INTIMATE CONNECTION WITH THE BUSINESS. ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 20 25. IN CASE OF HINDUSTAN HOSIERY INDUSTRIES VS. ITO (SUPRA), THE ASSESSEE FIRM CLAIMED AS BUSINESS EXPENDITURE, THE AMOUNT SPENT ON SENDING ONE OF ITS PARTNERS TO THE UNITED STATES FO R TRAINING IN BUSINESS MANAGEMENT. THE ITO DISALLOWED THE CLAIM ON THE GRO UND THAT THE TRAINING HAD NOTHING TO DO WITH THE BUSINESS OF MAN UFACTURE AND SALE OF HOSIERY GOODS CARRIED ON BY THE ASSESSEE FIRM WHICH WAS AFFIRMED BY THE LD. COMMISSIONER (APPEALS) AND ON FURTHER APPEA L, THE COORDINATE BENCH AT MUMBAI ALLOWED THE CLAIM OF THE ASSESSEE H OLDING THAT TRAINING IN MODERN BUSINESS MANAGEMENT WOULD BE BEN EFICIAL TO CARRYING ON THE BUSINESS OF ASSESSEE FIRM. WE HAVE GONE THROUGH THIS DECISION AND THIS DECISION AGAIN DOESNT SUPPORT TH E CASE OF THE ASSESSEE AS THE FACTS ARE CLEARLY DISTINGUISHABLE I N THE INSTANT CASE. WHAT IS RELEVANT IS NOT JUST THE ULTIMATE BENEFIT O R UTILIZATION OF SUCH EXPENDITURE FOR BUSINESS PURPOSES BUT WHAT IS EQUAL LY RELEVANT IS THAT THE POINT IN TIME WHEN THE EXPENDITURE WAS INC URRED, THE BUSINESS OF THE ASSESSEE SHOULD HAVE BEEN SET UP WH ICH HOWEVER, IS NOT THE CASE IN THE INSTANT CASE. 26. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRE TY OF FACTS AND CIRCUMSTANCES OF THE CASE, THE CLAIM OF EDUCATION E XPENDITURE OF RS 1,11,35,190/- HAS BEEN RIGHTLY DISALLOWED BY THE AS SESSING OFFICER AND CONFIRMED BY THE LD CIT(A) AND WE DONOT SEE ANY INFIRMITY IN THE SAID ORDERS AND NO INTERFERENCE IS CALLED FOR. THE MATTER IS ACCORDINGLY DECIDED AGAINST THE ASSESSEE AND IN FAV OUR OF THE REVENUE. IN THE RESULT, GROUND NO. 2 OF ASSESSEES APPEAL IS DISMISSED. ITA NO. 654/JP/2017 SHRI HARSHVARDHAN JOHARI VS. DCIT 21 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/03/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11/03/2020. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI HARSHVARDHAN JOHARI, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CENTRAL CIRCLE- 3, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 654/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR