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2021 (9) TMI 13 - AT - Income TaxExpenditure under the head Special Purpose Vehicle (SPV) Charges - allowable revenue expenditure u/s 37(1) or not? - contribution of 10% out of auction sales towards SPV - HELD THAT:- As decided in M/S RAMGAD MINERALS & MINING LIMITED VERSUS ACIT CIRCLE – 1, BELLARY [2020 (11) TMI 174 - ITAT BANGALORE] contribution to SPV being 15% of sale proceeds, under category B, is an allowable expenditure for year under consideration. Also see M/S VEERABHADRAPPA SANGAPPA & CO. [2020 (12) TMI 1145 - ITAT BANGALORE] wherein held contribution to SPV being 10%/15% of sale proceeds, under category A/B, is to be allowable as expenditure for year under consideration. Contribution towards SPV under both the Category mines disallowed by applying Explanation 2 to section 37(1) - voluntary expenditure incurred by assessee towards community welfare - Asst. Year 2014-15 - HELD THAT:- As decided in SHRI B. RUDRAGOUDA VERSUS THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, BELLARY. [2021 (4) TMI 1249 - ITAT BANGALORE] the assessee being an individual, and not a corporation under the Companies Act, 2013, Explanation 2 to section 37 cannot be applied so as to deny the voluntary expenditure incurred by assessee towards community welfare. Accordingly, we are of the opinion that the expenditure incurred is wholly and exclusively for the purpose of business of assessee and has to be allowed as business expenditure. Accordingly, this ground of appeal is allowed. Contribution to Flood Relief - Eligibility of relief u/s. 80G - Contribution towards Flood Relief Works in pursuant to MOU dated 2/7/2010 entered with local Dy. Commissioner - as per CIT-A as per the MOU entered by assessee with Govt. of Karnataka the donations were given to Chief Minister's Relief Fund and was eligible for exemption u/s. 80G - only reason for not granting relief u/s. 80G is that assessee did not obtain the exemption certificate under the relevant provisions of the Act - HELD THAT:- It is not the case of the Revenue that said expenditure has not been incurred for the purpose as entered into Govt. of Karnataka. The above reproduced clause clearly states that assessee is eligible for exemption u/s. 80G - authorities below even after admitting these facts have not granted relief to the assessee as per the provisions of sec. 80G of the Act. We thus remand this issue to the Ld. AO for computing the deduction eligible to assessee under 80G of the Act for the donations given to the Chief Minister's Relief Fund (calamity).Accordingly the grounds raised by assessee for year under consideration stands allowed for statistical purposes. Payment towards membership fee and legal fund respectively to Federation of Indian Mineral Industries - Allowable revenue expenditure u/s 37 or not? - HELD THAT:- The legal payment incurred by assessee is towards representing case filed of FIMI against which TDS has been deducted as observed by the Ld. CIT(A) - this organization has been formed to safeguard the rights of mine owners and to protect interest of industries, present in this spear of mineral exploration and production. In our opinion the said amount does not qualify to be considered as donation. It is an expenditure incurred to safe-guard assessee's business interests and has to be considered under the provisions of Sec. 37(1).
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