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2007 (2) TMI 194 - HC - Income TaxClaim as business expenditure u/s 37 - Payment towards the construction of building - commercial expediency test - HELD THAT:- Since the contribution made by the company is for the Chamber of Commerce whose activities are closely linked with the welfare of the corporate entities who are members therein and whose interest are taken care of by the Chamber of Commerce, irrespective of whether the expense incurred is compulsory or otherwise. Hence, considering the fact that the payment is made for the purpose of the business, it satisfies the commercial expediency test to accept the case of the assessee. Thus, we do not find any justification to accept the case of the Revenue that the provisions of section 37 have to be viewed in a very strict manner. It may be noted that section 37 itself is concerned with "an expenditure laid out or expended wholly or exclusively for the purpose of the business or profession" to qualify for deduction. With the necessity no longer a valid test, we reject the Revenue's appeal. In the circumstances, the first question is answered against the Revenue. As regards the second question, whether the premium payable on redemption of debentures in future years is to be spread over and part of it allowed as a deduction in this year, the same is covered by the decision of this court reported in [2006 (2) TMI 151 - MADRAS HIGH COURT] (CIT v. First Leasing Co. of India Ltd.), to which one of us was a party, and is therefore answered against the Revenue. Hence, both the questions are answered against the Revenue and the appeal is dismissed. Thereby, we confirm the order of the Tribunal and dismiss the tax case.
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