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2022 (1) TMI 416 - ITAT BANGALOREAllowable business expenditure - expenditure pursuant to a letter addressed by the Deputy Commissioner, Bellary wherein assessee participated in the State Government Programme (“Bhagyalakshmi Scheme”) by contributing sum which is acknowledged by the Deputy Commissioner as donation - AO disallowed the same only for the reason that certificate u/s. 80G was not obtained - HELD THAT:- Admittedly, the entire payment has gone for social development of an area wherein mining activities were undertaken and assessee was one of the licensee to the mines allotted by the Indian Bureau of Mines. See M/S VEERABHADRAPPA SANGAPPA & CO. VERSUS THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE – 1, BELLARY. [2020 (12) TMI 1145 - ITAT BANGALORE] In the present case assessee has contributed funds at the specific request of local administration, which is meant to be used for the benefit of public. As observed in the above said case, the assessee would also be required to approach the appropriate Government and its authorities for grant of permits, licenses. Hence it is a prudent decision of the assessee to oblige to the appeal made by the local administration and incurred the expenses for public purposes. Hence the assessee has incurred expenses not only on account of social responsibility, but also keeping in mind the goodwill and benefit it would yield in the long run in earning profit. Hence this expenditure would be in the realm of “business expenditure”. Accordingly, we hold this expenditure is allowable as deduction. Accordingly, we set aside the order passed by Ld.CIT(A) on this issue and direct the AO to delete this disallowance - See MADRAS REFINERIES LTD. [2003 (11) TMI 47 - MADRAS HIGH COURT], KAMAL AND CO. [1992 (12) TMI 19 - RAJASTHAN HIGH COURT] and DEVELOPMENT TRUST PVT. LIMITED [1991 (9) TMI 43 - ALLAHABAD HIGH COURT] - we direct the Ld.AO to delete the disallowance made - Decided in favour of assessee.
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