Judgment:
D.R. Dhanuka, J.
1. By this reference under section 256(1) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal has referred the following question of law to this court for opinion :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the expenditure of Rs. 60,678 incurred for management training of Shri Vijaykumar Kejriwal, a partner of the assessee-firm, was an allowable deduction in determining the business profits of the firm for the assessment year 1978-79 ?'
2. The assessment year concerning this reference is 1978-79.
3. At the material time, the assessee-firm consisted of five persons, i.e., including one Shri Vijaykumar Kejriwal. The assessee was a family concern of a mother and her four sons, among whom Shri Vijaykumar Kejriwal was one. During the previous year relevant to the assessment year 1976-77, Shri Vijaykumar Kejriwal was sent for higher studies to the United States of America (U. S. A). Shri Vijaykumar got a degree of an American University in business management. The assessee carries on business as manufacturer of nylon socks and underwear. The assessee had taken Shri Vijaykumar Kejriwal as a partner in the firm almost at or about the same time when Vijaykumar was sent to for higher studies to the U. S. A. as aforesaid. The age of Shri Vijaykumar Kejriwal was 21 at the material time. The assessee claimed that the expenditure amounting to Rs. 60,678 incurred by the assessee for the training of Shri Vijaykumar Kejriwal be allowed as business expenditure. The Income-tax Officer rejected the claim of the assessee on the ground that the expenditure incurred was of personal nature and not a business expenditure. The Commissioner of Income-tax (Appeals) and the Income-tax Officer rightly held that there was no nexus between the business of the assessee and expenditure incurred. However, the Tribunal accepted the claim of the assessee. Having regard to the facts of the case, it is not possible to agree with the view taken by the Tribunal.
4. We have gone carefully through the orders of the Income-tax Appellate Tribunal, the Commissioner of Income-tax (Appeals) and the Income-tax Officer. It is not possible to accept the submission of learned counsel for the assessee that the expenditure in question was incurred in relation to the business of the assessee-firm. We have no hesitation in recording our conclusion to the fact the expenditure incurred by the assessee has no nexus with the business of the assessee. We agree with the conclusion arrived at by the Income-tax Officer and the Commissioner of Income-tax (Appeals).
5. In the light of the above discussion, we answer the question referred to us in the negative, i.e., in favour of the Revenue and against the assessee.
6. No order as to costs.