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2017 (6) TMI 783 - AT - Income TaxDisallowance of provident fund contribution made on behalf of the sub contractors claimed as expenditure - expenditure incurred is "wholly and exclusively" for the purpose of business - Held that:- Assessing Officer cannot question the reasonableness by putting himself in the arm-chair of the businessman and assume status or character of the assessee and that it is for the assessee to decide whether the expenses should be incurred in the course of his business or profession or not. Courts have also held that if the expenditure is incurred for the purposes of the business, incidental benefit to some other person would not take the expenditure outside the scope of Section 37(1) of the Act. Further, it is settled law that the commercial expediency of a businessman’s decision to incur a particular expenditure cannot be tested on the touchstone of strict legal liability to incur such expenditure. We are of the view that in the present case, the disallowance of employees contribution of Provident Fund (as made by AO) & that of employers contribution of Provident Fund (as enhanced by CIT (A)] was uncalled for and therefore set aside. Thus the grounds of Assessee are allowed.
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