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2019 (8) TMI 1767 - AT - Income TaxAddition on account of project expenses - Allowable business expenses or not? - HELD THAT:- As relying on own case [2018 (12) TMI 762 - DELHI HIGH COURT] it would be incongruous for the Revenue to urge that the purpose and goal behind the activities undertaken by the assessee was not commercial but charity as the intent and motive behind them was not to earn profit. The expenditure incurred to carry out social and economic development would in this background constitute a 'business' or 'commercial' activity undertaken by the assessee. It would be a contradiction in terms, if we hold that the expenditure would be non-deductible expenditure or expenditure without business expediency. Under section 37 it does not matter whether or not the expenditure was in the nature of donation or Section 80G of the Act was not attracted. The conditions stated in Section 37 matter and constitute the test. Expenditure incurred in furtherance of and connected with the business and commercial activities for which the respondent- assessee was established cannot be disallowed as expenditure not relatable and incurred for 'business' purposes. On the question of capital expenditure, the assessing officer did not refer to or examine whether the capital assets created were for third party villagers - assessee was not the owner of the assets created and developed. The assets created were not capital assets in the hands of the respondent-assessee. The respondent-assessee had contributed, developed, financed aid created assets which belonged to third persons. The expenditure incurred therefore would not be ‘capital’ in nature in the hands of the respondent assessee - Decided against revenue.
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