Is Expense for Higher Studies of a professional deductible?

Tax queries 634 views 1 replies

 

Hi,

If a doctor practicing as a proprietor of the clinic, goes for a higher study for a specialisation in his field spending 20 lakhs, then, whether the expenditure for his studies including his capitation fee paid, can be deducted u/s 37 ? any cases laws? a detailed reply from the experts is highly appreciated.

Thanks in advance


Replies (1)

Respected sir

hi

‘Professional Income’ is income from exercise of any profession or vocation which calls for an intellectual or manual skill. It covers doctor, lawyers, accountants, consulting engineers, artists, musicians, singers etc.

Profits of business or gains from profession are calculated after allowing all legitimate business expenditure. Some important deductions admissible in computing income from business or profession are as follows  [sections 30 to 36  of Income Tax Act] —

 Any other expenditure which is not of capital nature or personal expenses of the assessee is allowed if it is expended wholly and exclusively for the purposes of business or profession

 The expense on such studies is exclusively related to profession hence not personal expenditure but may be of capital expenditure and deduction under section 37 can be denied

Alternatively  

It should be capitalized and depreciation can be claimed as intangible assets

Following are certain definition of Know how. I think cost of higher study for a specialisation in his field is comes under the preview of the definition of know-how and accordingly depreciation under section 32 is available to the assessee @ 25% pa

 

  1. the (technical) knowledge and skill required to do something

 

  1. is the technical expression of knowledge or how to physically apply knowlege in the physical world. Examples are the manual and mental skills of a master craftsman or tradesman.

 

  1. Information that enables a person to accomplish a particular task or to operate a particular device or process.

 

  1. A particular kind of technical knowledge that may not be confidential but that is needed to accomplish a task.

 

  1. means having the right mix of skills and solid experience to apply in a new but similar situation. It requires an understanding of common issues and risks, and the ability to overcome these with pragmatic responses and solutions.


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