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2017 (11) TMI 453 - HC - Income TaxAllowable business expenditure - Disallowing the contribution to Primary Agricultural Credit Cooperative Society Development Fund being non business expenditure - Held that:- Before proceeding, it will not be out of place to mention that respondent is statutory authority registered under the Rajasthan Cooperative Society Act and they are required to follow the rules which are mandatory in nature and if incur disqualification either they will be superseded or they will incur disqualification. In that view of the matter, while interpreting local act, the court has very guarded under the Income Tax Act whether the deduction or the expenses which are incurred are admissible under Section 37 or not. Looking to the provisions of the Rule 2003 referred hereinabove, the expenses are mandatory in nature, thus, they are required to be deducted to be kept in reserve fund and they are expenses as stated under Rule 28. In that view of the matter, it is to be kept reserve fund and the view taken by the AO is very conservative and considering the opinion neither the Tribunal nor the CIT(A) has committed any error. Hence, the first issue is required to be answered in favour of the assessee against the department.
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