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2020 (12) TMI 973 - AT - Income TaxClaim of deduction of expenditure u/s 37(1) - Contribution to BATF - contribution made by the assessee to BATF as per the directions of Dy. Commissioner of Bellary District Administration for the purpose of infrastructure development and to maintain cordial relationship with the Government and provide social facilities to the deprived class and which has a nexus with the assessee business - HELD THAT:- We find that the AO has not disputed the genuineness of the expenditure and of the view, that it is not connected to the business and not allowable under Section 37(1) of the Act. We considered the judicial decisions and the provisions of law, are of the opinion that the contribution made by the assessee is wholly and exclusively for the purpose of business and is allowable under Section 37(1) of the Act. Accordingly, we set aside the order of CIT (Appeals) on this disputed issue and direct the Assessing Officer to delete the addition and allow the ground of appeal of the assessee. Provision for audit fees - AO has disallowed the claim as the assessee has failed to deduct the TDS and applied the provisions of Section 40(a)(ia) - contentions of the Ld. AR that the Audit fee was not credited to the Auditors Account and was lying in the provision for audit fees payable account - alternative contention submitted by the Ld. AR, that the recipient has offered the income for income tax purpose and paid taxes as per the second proviso to Section 40(a)(ia) of the Act, and therefore the payee has discharged his obligation - HELD THAT:- We considering the submissions and the facts, are of the opinion that the matter requires examination and verification of fact that the payee has discharged its obligation to pay the taxes on Audit fees. Hence to meet ends of justice, we provide one more opportunity to the assesses to substantiate the claim before the Assessing Officer with proof of offering of income by the payee for income tax purpose. Accordingly, we set aside the order of the CIT (Appeals) on this disputed issue and restore the entire disputed issue for limited purpose to the file of AO to examine and verify the claim and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the details and allow the ground of appeal of assessee allowed for statistical purposes.
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