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2013 (12) TMI 366 - HC - Income TaxContributions under instructions of State Government - Whether allowable as deduction u/s 37(1) or not - Held that:- Business expediency is a wide term and includes all those decisions or actions which are taken by the company itself wholly or exclusively for the business purpose. The decision should be taken by the company itself and not by the outsider - Under the Companies Act or Income Tax Act, no privilege has been conferred on the government except exemption granted in pursuance to the provision contained therein - So far as running of business by the government companies incorporated under Section 617 of the Act is concerned, it must be done by the Company itself and not by the government - Government may take policy decision but does not seem to have got right to interfere with the routine functioning of the government companies with regard to business expediency - The expenditure made like in the present case on the direction of the government shall not be business expenditure and deduction shall not be allowable. Diversion of fund by the government to meet out the requirement of a government departments seems to be not permissible - It was not a policy decision to secure business interest of the assessee but the decision to meet out the requirement of 'estate department' - No decision was taken by the Board of assessee in terms of letter of government that it requires houses for its officers at Lucknow to meet out the business expediency - In the absence of any decision by the Board or the Managing Director, the expenditure incurred seems to be not business expenditure and no deduction is allowable - Decided against assessee.
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