DEVI PRASAD SINGH, VISHNU CHANDRA GUPTA, J. - (1.) THESE two appeals filed by the appellant against the assessment year 2001 -02 and 2004 -05 involve common question of law and facts, hence with the consent of the parties' counsel are being decided by the present common judgment.
(2.) WHILE admitting the appeal, a Division Bench of this Court has framed following substantial question of law : "Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal erred in law in holding that the expenditure incurred by the Assessee company on foreign education and travel of son of the Managing Director of the Company was business expenditure ? The assessee company is engaged in the manufacture and sale of Asbestos sheet and allied products. The company was selected for scrutiny as per Board's circular. The assessee furnished the substantial audit report in pursuance to recommendation for the purpose under Section 142(2A) of the Act. A notice under Section 142(1) along with a questionaire under Section 143(2) was issued, in response to which the assessee filed details and particulars. During the course of proceeding before the assessing authority, question cropped up with regard to expenditure incurred on education abroad of Mr. Priyank Tayal, son of the Managing Director in July, 2001. Mr. Priyank Tayal had gone for higher education and training in 2000 in United States of America in pursuance to an agreement dated 17.7.2000. After coming back from U.S.A., Mr. Tayal joined the company as Director on 23.6.2004. The assessing authority noted that an amount of Rs.15,66,498/ - was spent by the company on education and Rs.1,37,737/ - as travelling expenses.
(3.) THE assessing authority relying upon the provisions contained in Section 47 and 40A (g) of the Income Tax Act held that the expenditure incurred on the studies and training of Mr. Priyank Tayal was not a business expenditure, hence added in the overall income of the assessee. Feeling aggrieved, the appeal was preferred and the appellate authority in the first round of litigation, by its order dismissed the appeal of the assessee. However, on appeal to the tribunal, the matter was remitted back for decision afresh to the assessing authority to adjudicate the controversy, by order dated 21.11.2005 after examining the issue on certain points.;