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2019 (4) TMI 1027 - AT - Income TaxDisallowance of expenditure claimed by it towards the ‘Contractors Benevolent Fund’ (CBF) u/s 37(1) - HELD THAT:- The assessee company is engaged in the business of executing civil contract works primarily for the State Government of Karnataka. Authorities below that the State Government of Karnataka had directed the PWD / user Department to deduct 0.1% of the sanctioned bill towards ‘Contractors Benevolent Fund’ (CBF). The deduction of 0.1% admittedly effected by the PWD / user Department on the express instructions of the State Government of Karnataka towards ‘Contractors Benevolent Fund’ (CBF) is undeniably out of sanctioned bill for contract works executed by the assessee. The business of the assessee, being execution of civil contracts of the State Government of Karnataka, in our view, the deduction of 0.1% thereof towards the ‘Contractors Benevolent Fund’ (CBF) by the PWD / user Department on instructions of the State Government, even though not voluntary, is an amount incurred by the assessee wholly and exclusively in the furtherance and in the course of the assessee’s business and consequently is expenditure to be allowed under section 37(1) - We consequently delete the disallowances for Assessment Year 2014-15 and Assessment Year 2015-16 made / upheld in respect of amounts incurred by the assessee towards ‘Contractors Benevolent Fund’ (CBF) in the course of its business of executing civil contract works for the State Government of Karnataka. - Decided in favour of assessee.
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