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2014 (11) TMI 898 - HC - Income TaxAllowability of expenses u/s 37 - Amount paid to Municipal Corporation for legalizing the construction of building – Held that:- Following the decision in JAMNA AUTO INDUSTRIES Versus COMMISSONER OF INCOME -TAX [2008 (1) TMI 62 - PUNJAB & HARYANA HIGH COURT] and considering Explanation to Section 37(1) inserted retrospectively w.e.f 1.4.1962 it has been held that any payment made by an assessee on account of infraction of law would not be admissible deduction u/s 37 of the Act - However, any damages paid by the assessee for breach of contract on its part were deductible - the assessee had paid the compounding fee as compensation for condoning deviations from original sanctioned plan - In substance, the payment was in the nature of the amount paid on account of infraction of law as there was violation in the building plan of the assessee – Decided against assessee. Claim u/s 80G deleted – Donation made towards Prime Ministers Relief Fund for Gujarat Earth Quake Relief Fund – Held that:- The assessee was unable to show in the light of Explanation 5 to section 80G which was inserted by Finance Act 1976 effective from 1.4.1976 that the deduction was admissible - the assessee could not claim deduction u/s 80G of the Act in respect of donations by way of clothes sent to Prime Minister Relief Fund for Gujarat Earthquake relief the same being in kind and not in cash, cheque or draft - The Tribunal rightly declined the benefit u/s 80G - Decided against assessee. Eligibility for deduction u/s 37 - goods sent to the Prime Ministers Relief Fund for Gujarat Earth quake relief – Held that:- The Tribunal rightly observed that the contribution which was made by the assessee in kind to the Prime Minister's Relief Fund for Gujarat Earthquake relief was not on account of any business compulsion which could be termed to be falling within the expression “wholly and exclusively” - the expenditure incurred in the form of relief for earthquake victims although was for public good but would not have any impact on the business of the assessee - there being no commercial expediency in incurring such expenditure, it was not deductible u/s 37 - the assessee had given the donations in the form of clothes and claimed deduction u/s 37(1) by quantifying the same in monetary terms - it could not be said that it was essential for the assessee to have contributed towards the Prime Minister's Relief Fund for carrying on business activities – the order of the Tribunal is upheld – Decided against assessee.
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