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2020 (3) TMI 553 - HC - Income TaxDisallowance of payments made to Shri Faraz G. Joshi in the form of salary / perquisites - allowable revenue expense u/s 37(1) - HELD THAT:- Supreme Court in the case of Sassoon J. David & Co. Pvt. Ltd. Vs. CIT [1979 (5) TMI 3 - SUPREME COURT ] examined the expression “wholly and exclusively” appearing in Section 10(2)(xv) of the Income Tax Act, 1922 which corresponds to Section 37 of the Act. Sub-section (1) of Section 37 says that any expenditure not being expenditure of the nature described in Sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee, laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head “Profits and gains of business or profession”. It was observed that the expression “wholly and exclusively” appearing in the said section does not mean “necessarily”. Ordinarily, it is for the assessee to decide whether any expenditure should be incurred in the course of his or its business. Such expenditure may be incurred voluntarily and without any necessity. If it is incurred for promoting the business and to earn profits, the assessee can claim deduction under Section 10(2)(xv) even though there was no compelling necessity to incur such expenditure. The fact that somebody other than the assessee is also benefited by the expenditure should not come in the way of an expenditure being allowed by way of deduction under Section 10(2)(xv) of the Act. We do not find that question Nos.1 to 4 as proposed by the Revenue raise any substantial question for consideration of the Court. Addition made in pursuant to the report of the DRI after recording that the report has been quashed by Customs, Excise & Service Tax Appellate Tribunal (CESTAT) - Whether Tribunal is justified in deleting the addition made in pursuant to the findings provided by DRI, a Government Agency on the ground that assessing officer did not conduct any independent enquiry and only relied upon the finding of DRI, ignoring that DRI is a Government Agency and the information provided by it can be fully relied upon? - HELD THAT:- We find that Tribunal relied upon the order of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in the assessee’s own case and deleted the additions made by the assessing officer. We have been informed that Commissioner of Customs has assailed the finding returned by the CESTAT before the High Court of Gujarat and by order dated 16.02.2017, the High Court of Gujarat has admitted the said tax appeal on the substantial questions of law framed thereunder - consequently, we admit this appeal on question Nos.5 and 6 above.
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