Income from exchange gain eligible for deduction u/s.80HHC - Held that:- Question is covered by the judgment in Commissioner of Income Tax-III vs. M/s. Priyanka Gems [2014 (3) TMI 938 - GUJARAT HIGH COURT] - decided in favour of assessee
Scrap income eligibility for deduction u/s.80IB/80HHC - held that:- This question covered in the case of The Commissioner of Income-tax vs. Jikar A. Saiyed [2013 (12) TMI 1562 - GUJARAT HIGH COURT]
Excise duty and sales tax not be included in the total turnover while calculating the deduction u/s.80HHC - held that:- Issue covered in favour of the assessee by virtue of the decision in the case of Commissioner of Income-tax vs. Pogagen AMP Nagarsheth Powertronics Ltd [2014 (3) TMI 934 - GUJARAT HIGH COURT]
Belated payment of provident fund and ESIC amounts - Held that:- In so far as the employer’s contribution to Provident fund and ESIC, which were deposited late is concerned, deduction would be available. The question is answered in favour of the assessee. However, with respect to belated payments of provident fund and ESIC pertaining to the employee’s contribution, no deduction would be available and accordingly, the question is answered against the assessee.
Motion of No Confidence in Adhyaksha - Section 28 of the U.P. Kshettra Panchayat & Zila Panchayat Act, 1961 - it was alleged that the motion for no confidence has been done with an ulterior motive to usurp the office of the appellant. It was alleged that atleast three members whose names were mentioned in the Motion for No Confidence had not signed the motion/notice requesting the Collector to call a meeting.
Held that: - the amendment as well as the main provision in Section 28 is in absolute accord with the vision explicitly enunciated in the Preamble of the Constitution of India. In fact, the spirit which led to ultimately encoding the goals of “WE THE PEOPLE” in the Preamble of the Constitution of India, permeates all other provisions of the Constitution of India. The fundamental aim of the Constitution of India is to give power to the People. Guiding spirit of the Constitution is “WE THE PEOPLE OF INDIA”. In India, the People are supreme, through the Constitution of India, and not the elected Representatives. Therefore the provision for right to recall through the Vote of No Confidence is in no manner repugnant to any of the provisions of the Constitution of India.
The whole edifice of the challenge to the constitutionality of Section 28 is built on the status of the petitioner as a member belonging to the reserved category. It has nothing to do with the continuance, stability, dignity and the status of the Panchayat Institutions. The personal desire, of the petitioner to cling on to the office of Adhyaksha is camouflaged as a constitutional issue. The provision of No Confidence Motion, in our opinion, is not only consistent with Part IX of the Constitution, but is also foundational for ensuring transparency and accountability of the elected representatives, including Panchayat Adhyakshas. The provision sends out a clear message that an elected Panchayat Adhyaksha can continue to function as such only so long as he/she enjoys the confidence of the constituents.
The provision for removing an elected representative such as Panchayat Adhyaksha is of fundamental importance to ensure the democratic functioning of the Institution as well as to ensure the transparency and accountability in the functions performed by the elected representatives.
Directions to summon the documents mentioned in the application and to give liberty to the appellant to file a detailed reply after the due examination of the said documents - Held that:- In the circumstances, it is not appropriate for the Appellant to contend that he is not entitled to file the reply to the notice issued by respondent under section 8(1) of PMLA till he gets the copies of documents. Appellant could not be permitted to delay the proceedings pertaining to provisional attachment order in the facts and circumstances before the Adjudicating Authority.
Consideration of another fact in the facts and circumstances shall be relevant which is that if the Hon'ble Supreme Court has not stayed the order of Hon'ble Gujarat High Court regarding the right of the Appellant to get the copies of some of the documents on payment of charges, then what steps had been taken by the Appellant and M/s. Neptune Overseas Limited from 9th February, 2012 up till the order of Hon'ble Supreme Court on 22nd March, 2012 was passed or even thereafter as according to the learned counsel for the appellant the said order regarding getting the copies of the documents has not been stayed.
Perusal of documents whose summoning or production is prayed by the appellant also reveals that the particulars given are not complete and on the basis of the information given by the appellant neither it could be inferred that they are relevant nor they can be summon easily nor the direction could be given by the Adjudicating Authority to concern authorities to produce the documents whose production is sought by the appellant. The prayer of the Appellant is liable to be declined also on this ground.
For 'reason to believe' the respondent's belief must be in good faith and it should not be a mere pretence and it would be open to examine whether 'reasons for believe' have a rational connection or a relevant bearing to the formation of the belief. On consideration of section 5 and section 8 of the Act, it is apparent that section 5 contemplates and requires that respondent not only to have 'reasons to believe', but the reasons for such beliefs have to be recorded in writing. Whereas section 8 requires that on receipt of complaint, if Adjudicating Authority has reason to believe, it can issue a show cause notice, but it does not require that these reasons are to be recorded in writing by Adjudicating Authority. The satisfaction of the adjudicating authority for having the reasons to believe is formed on the basis of complaint sent by the enforcement directorate under section 5(5) of the Act, including copy of the provisional attachment order, copy of charge sheet and other material. In the circumstances, the appellant cannot deny that he cannot be completely absolved of illegality alleged against him and the company.
The plea raised by the appellant in his defense that in respect of FIR for the commission of offence, further investigation has been ordered by the learned Magistrate would also not entitle him to summon the documents as alleged by him. Whatsoever is the relevance of such further investigation has to be canvassed before Adjudicating Authority. The Appellant, however, could not contend that he would not file the reply to the notice under section 8(1) of PMLA unless he gets the copies of the documents whose production was sought in the application under section 11 of PMLA.
In the present case this will only be for the academic purpose because admittedly 180 days have not yet expired. Whether the time of 180 days can be extended or the time taken by the Adjudicating Authority in summoning the record or to do anything in discharge of its power under section 11 of PMLA is to be excluded or not, is not to be decided in the present appeal in the facts and circumstances because the time shall be expiring on 16th April, 2014 and the arguments have been completed before the Adjudicating Authority who has been stayed from passing the final order.
It is not necessary to implead every person or company or legal entity from whom the record is to be summoned or to whom the directions are to be issued for production of the documents nor such parties are to be impleaded for the purpose of production of documents. The Adjudicating Authority and this Tribunal under the relevant provisions can summon any record and can take steps as contemplated under section 11 and/or under section 35 of the Act and such powers cannot be restricted on the ground as has been alleged by the learned counsel for the respondent. This plea on behalf of the respondent is therefore, repelled.
This Tribunal is not inclined to grant any relief sought by the appellant in this appeal.
The High Court of Bombay allowed the writ petition to be withdrawn as per the petitioner's request. The writ petition stands dismissed as withdrawn. (Case citation: 2014 (3) TMI 1117 - BOMBAY HIGH COURT)
Non-deduction of tax at source on guarantee commission paid to bank – Revenue contended that tax to be withhold u/s 194H – principal and agent relation - Held that:- As decided in the case of Kotak Securities Limited v. DCIT [2012 (2) TMI 77 - ITAT MUMBAI] Principal agent relationship is a sine qua non for invoking the provisions of Section 194 H. While it is termed as 'guarantee commission', it is not in the nature of 'commission' as it is understood in common business parlance and in the context of the section 194H. This transaction, in our considered view, is not a transaction between principal and agent so as to attract the tax deduction requirements u/s 194H. - Decided in favour of assessee.
Refund of security deposit which was furnished in pursuance of a contract awarded to the petitioner - Held that: - The petitioner may either invoke the arbitration clause (if it exists) and if there is no arbitration clause, may file a money claim before the competent civil court - relief sought in this petition cannot be granted in exercise of the writ jurisdiction under Article 226 of the Constitution, as this Court cannot entertain a claim of this nature seeking essentially a money decree in a contractual matter - petition dismissed.
Invoking of section 50C in relation to the two properties sold by the assessee through Public auction - Held that:- Invoking section 50C for the purposes of substituting the full value of consideration in order to compute the capital gain would fail since there would not be any differential between the stated consideration and the Value to be considered by the stamp valuation authority of the state government for the payment of stamp duty. However, it has been pointed out by the Revenue that the buyers of the properties have paid stamp duty at the value determined on the basis of rates prescribed in the ready reckenor, which are higher than stated consideration.
In our considered opinion, the aforesaid factum would not make any difference to the rationale of invoking section 50C of the Act, which has to be decided on the basis of the prevailing legal position, and not on the basis of the position taken by a party. Pertinently, the purchaser of the properties are liable to bear expenses of stamp duty and it was not within the domain of the assessee and therefore assessee cannot be put to a jeopardy of invoking of section 50C of the Act merely because of the fault of the buyers of the properties.
The CIT(A) erred in affirming the invoking of section 50C of the Act in relation to the two properties sold by the assessee through Public auction. Accordingly, we set-aside the order of the CIT(A) and direct the Assessing Officer to allow appropriate relief to the assessee as per law.
Enhanced compensation paid to the owner of land as a part of cost of acquisition for the purposes of computation of capital gains - Held that:- The claim of the assessee in question has a bearing on the ultimate determination of tax liability. Admittedly, an appellate authority has wide powers to admit a fresh claim which was not before the Assessing Officer. The legal position in this regard is quite well-settled and we may refer to the judgements of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. Cit [1996 (12) TMI 7 - SUPREME Court] and Jute Corporation of India Ltd. vs. CIT (1990 (9) TMI 6 - SUPREME Court) in this regard. In the present case, the additional ground entertained by the CIT(A) involved a point of law and it related to assessability of capital gain, which was subject-matter of consideration before him. It is also evident that the claim was based on an order of a judicial body, namely, District Judge, Jalgaon rendered with reference to section 18 of the Land Acquisition of Act, 1894. The claim of the assessee is arising from operation of law and therefore, in our view, the CIT(A) made no mistake in admitting such a claim for the purposes of computing assessee’s correct tax liability. Accordingly, we hereby affirm the action of the CIT(A) in this regard and the Revenue has to fail.
Revision u/s 263 - Held that:- CIT cannot seek to substitute his opinion on the percentage of profit that has to be applied in the place of the opinion of the Assessing Officer under the garb of revisionary proceedings u/s 263 specifically when the AO has at page 4 and 5 of his order discussed the issue in detail and passed an order after due application of mind. Thus, the assessee succeeds on this ground.
Whether the interest on deposits made out of funds collected from purchasers / customers is to assess under the head 'income from business’ or under the head 'income from other sources’- Held that:- We find that the assessee has consistently disclosing the interest income under the head 'income from business’ for the last three previous years, and the Revenue has been accepting the same as such. Basically, on the principle of consistency, this should not be disturbed unless the facts warrant such action.
Thus, the issue whether interest income on deposits made out of surplus money from advance raised for purchase is assessable under the head `income from business’ or not has been adjudicated in favour of the assessee by those two High Courts. Hence the view taken by the AO is a possible view. Under the circumstances, the learned CIT cannot substitute the possible view of the Assessing Officer with his own view in an order passed u/s 263 of the Act as held by various High Courts as well as the Hon’ble Supreme Court. Thus, we uphold the contentions of the assessee and cancel the order of the CIT. - Decided in favour of assessee.
Addition made on account of prior period expenditure - Held that:- We find that the grievance of the Revenue is against the decision of the Tribunal in assessee’s own case for the earlier assessment year, which is disputed by it in the High Court. Such a ground cannot be countenanced. As admittedly the issue is covered in favour of the assessee, by the decision of the Tribunal in assessee’s own case for the earlier assessment year, we respectfully follow the same and dismiss the appeal of the Revenue.
Addition towards Prior Period Expenditure - actually the amount was offered as income and the loss for the year is reduced in the Profit & Loss Account - Held that:- The assessee is supporting the order of the learned CIT(A) by explaining that in fact it was income earned by way of reduction in expenditure and that the CIT(A) is justified in deleting the addition. As the ground of the Revenue is not on the lines taken by the assessee in the cross objection, we do not find any reason to separately adjudicate the same. Suffice to say, as the ground of the Revenue has been dismissed for the reason that they disputed the proposition laid down in the Tribunal order of the earlier year, the cross objection need not be adjudicated separately.
Territorial jurisdiction of the respondents in proceeding for assessment in the petitioners case at Indore (M.P.) - Held that:- Having considered the submissions made by the learned counsel for the parties, as agreed to, we dispose of this writ petition by directing the competent authority of the respondents to decide the petitioners grievance about the jurisdiction and pass an appropriate order on it keeping in view the provisions of Section 124 (2) (3) and (4) of the Income Tax Act, 1961, as expeditiously as possible.
PE in India - assessee has a business connection in India u/s.9(1)(i) - income deemed to accrue or arise in India u/s.9(1)(i) - Held that:- Tribunal in assessee’s own case for A.Y. 2008-09 [2014 (4) TMI 529 - ITAT PUNE] held that the assessee did not have any PE in India, much less a PE to which subject royalties and fees for technical services could be attributed. In terms of Indian-German DTAA, India does not have right to tax these receipts as business profit under Article 7. In the light of above finding that no revenue earned by the assessee could be said to be attributable to PE, even if one was to come to the conclusion that a PE existed, no taxability could arise under Article 7. The assessee has offered the royalties and fees for technical services for taxability in India under Article 12A and to that extent, admitted tax liability exists. This approach of the Assessing Officer was rejected by the CIT(A) in A.Y. 2006-07 for the reasons discussed above. Accordingly, the issue in ground No.1 is allowed
Taxability of payment received by the assessee from EIPL on account of project “MOVE” - Held that:- The Ld.CIT(A) has not gone into the details of the terms of the agreement. It is true that some mark up is there which has described as administrative surcharge to the extent of 3%. Prima-facie, it appears that the project “MOVE” undertaken by the assessee company is not as a business activity but to support the group companies worldwide to improve their efficiency. In our opinion, this issue needs fresh adjudication. We, therefore, consider it fit to restore the issue to the file of the Ld.CIT(A) for Denovo adjudication with direction that he should examine the contention of the assessee in the light of the agreement between the assessee as a pool leader and its other group companies as Pool members.
Interest charged u/s.234B - Held that:- We with the consent of both the parties remit the issue of charging of interest u/s.234B to the file of the Ld.CIT(A) for fresh adjudication.
PE in India - Income accrual in India - Held that:- We are not inclined to interfere with the finding of CIT(A), who has held that the assessee does not have PE in India. Under the facts and circumstances, no revenue earned by assessee could be said to be attributable to PE, even if one was to come to the conclusion that a PE, even if no taxability could arise under Article 7. The assessee has offered the royalties and fee for technical services for taxability in India under article 12A and to that extent, admitted tax liability exists. This approach of Assessing Officer was rejected by CIT(A) in A.Y. 2006-07, which was upheld by us. Following the same reasoning, we uphold the order of CIT(A) on the issue. - Decided against revenue
Acquittal of respondent - non-compliance of Section 42(1) of the NDPS Act - destruction of opium (in the process of concealing opium in the well) - Held that: - if the officer had reason to believe that a search warrant or authorization cannot be obtained without affording opportunity for the concealment of evidence (which, in this case, would have resulted in destruction of evidence), as per proviso to Section 42(1) of the NDPS Act, he could have conducted the search of the well after recording grounds of his belief - Section 42(2) requires that grounds of belief so recorded have to be communicated to the immediate superior official within seventy-two hours - since in this case, there is total non-compliance of Section 42 of the NDPS Act, the High Court has rightly set aside the conviction of the respondent - appeal dismissed.
Disallowance of commission payment in respect of 25 agents, who are the residents of the North East - Held that:- The views expressed by the Assessing Officer are erroneous in law. The Assessing Officer has overlooked the importance of the books of accounts maintained in the ordinary course of business. Reference in this regard may be made to sub-section (2) of Section 32 of the Indian Evidence Act, 1872. The books of accounts maintained in the ordinary course of business are relevant and they cannot be discarded in the absence of appropriate reasons. The mere fact that recipient did not reply in some cases or they were not found at the address furnished by the assessee does not in the least prove the fact that they were non existent or that the payments shown to have been made by the assessee were imaginary.
With the advancement of technology, it has become possible to sell goods throughout the country through the internet. For that purpose, agents are required throughout the country. The mechanism in that regard has been disclosed by the assessee and has been recorded in the order of the CIT (Appeals). For the purpose of carrying on its business, the assessee has to recruit the agents. It may not be possible for the assessee to know them personally. Whatever address was furnished to the assessee, has been disclosed to the Income-tax Department. Payments were admittedly made by cheque after deduction of tax. The tax deducted as source has duly been deposited.
Scheme of amalagamation - Held that:- In view of the approval accorded by the Shareholders and Creditors of the Petitioner Companies, representation/reports filed by the Regional Director and the Official Liquidator, and no objections received to the proposed Scheme, there appears to be no impediment to grant of sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme under Sections 391 and 394 of the Companies Act, 1956. The Petitioner Companies will comply with the statutory requirements in accordance with law.
Certified copy of the order will be filed with the Registrar of Companies within 30 days from the date of receipt of the same. In terms of the provisions of Sections 391 and 394 of the Companies Act, 1956, and in terms of the Scheme, the Transferor Company and the property, rights and powers concerning the same will be transferred to and vest in the Transferee Company without any further act or deed
Scheme of Amalgamation - dispensation of meetings - Held that:- There are Shareholders in both the Transferor and Transferee Companies and all the Shareholders have given their consents for the proposed amalgamation and the letter of consents have been attached with the application. In view of the same the meetings of the Shareholders of the Transferor and Transferee Companies are dispensed with.
As stated that there are two Secured Creditors with three loan accounts in the Transferor Company and three Secured Creditors with six loan accounts in the Transferee Company. All the Secured Creditors have given their respective consents. In view of the same the meetings of the Secured Creditors of the Transferor Company and Transferee Company are dispensed with.
There are thirteen Unsecured Creditors in Transferor Company and two Unsecured Creditors in the Transferee Company. Out of thirteen Unsecured Creditors of Transferor Company twelve have given their respective consents which constitute 90% in number and 99.79% in value. All the Unsecured Creditors of the transferee company have given their respective consents. In view of the same the meetings of the Unsecured Creditors of the Transferor Company and Transferee Company are dispensed with.
Guilty of commission of the offence under Sections 7 and 13 (1)(d)(i)(ii) read with Section 13(2) of the Prevention of Corruption Act, 1988 - accused appellant sentenced to undergo rigorous imprisonment for one year for each of the offence and also to pay a fine of ₹ 1000/- in default to suffer simple imprisonment for three months more - complainant approached the accused appellant for release of essential commodities against his shop for the month of November, 1995 and the accused appellant demanded a bribe of ₹ 250/- to issue the release order - Held that:- In so far as the offence under Section 7 is concerned, it is a settled position in law that demand of illegal gratification is sine qua non to constitute the said offence and mere recovery of currency notes cannot constitute the offence under Section 7 unless it is proved beyond all reasonable doubt that the accused voluntarily accepted the money knowing it to be a bribe.
In the present case, the complainant did not support the prosecution case in so far as demand by the accused is concerned. The prosecution has not examined any other witness, present at the time when the money was allegedly handed over to the accused by the complainant, to prove that the same was pursuant to any demand made by the accused. When the complainant himself had disowned what he had stated in the initial complaint (Exbt.P-11) before LW-9, and there is no other evidence to prove that the accused had made any demand, the evidence of PW-1 and the contents of Exhibit P-11 cannot be relied upon to come to the conclusion that the above material furnishes proof of the demand allegedly made by the accused. We are, therefore, inclined to hold that the learned trial court as well as the High Court was not correct in holding the demand alleged to be made by the accused as proved. Mere possession and recovery of the currency notes from the accused without proof of demand will not bring home the offence under Section 7
In so far as the presumption permissible to be drawn under Section 20 of the Act is concerned, such presumption can only be in respect of the offence under Section 7 and not the offences under Section 13(1)(d)(i)(ii) of the Act. In any event, it is only on proof of acceptance of illegal gratification that presumption can be drawn under Section 20 of the Act that such gratification was received for doing or forbearing to do any official act. Proof of acceptance of illegal gratification can follow only if there is proof of demand. As the same is lacking in the present case the primary facts on the basis of which the legal presumption under Section 20 can be drawn are wholly absent.
Thus we cannot sustain the conviction of the appellant either under Section 7 or under 13(1)(d)(i)(ii) read with Section 13(2) of the Act.
Commission of offence under Section 323, 380 and 506 read with Section 34 of IPC - harassment complaint against sub-broker of Karvy Stock Broking Limited - residence of the accused has been shown at a place beyond the territorial jurisdiction of the Magistrate - Respondent No. 1 filed a complaint in the Court of Additional Chief Judicial Magistrate at Jangipur, Murshidabad on 1st of October, 2011, who after taking cognizance of the same, transferred the complaint to the Court of Judicial Magistrate, Jangipur, Murshidabad for inquiry and disposal - whether in a case where the accused is residing at a place beyond the area in which the Magistrate exercises his jurisdiction, inquiry is mandatory or not?
Held that:- The words “and shall, in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction” was inserted by Section 19 of Code of Criminal Procedure (Amendment) Act (Central Act 25 of 2005) w.e.f. 23rd of June, 2006. The aforesaid amendment, in the opinion of the legislature, was essential as false complaints are filed against persons residing at far off places in order to harass them.
This exercise by the Magistrate, for the purpose of deciding whether or not there is sufficient ground for proceeding against the accused, is nothing but an inquiry envisaged under Section 202 of the Code. In the present case, as we have stated earlier, the Magistrate has examined the complainant on solemn affirmation and the two witnesses and only thereafter he had directed for issuance of process.
In view of what we have observed above, we do not find any error in the order impugned.
Application u/s 12A rejection - Held that:- The only ground on which the DGIT in this case rejected the application u/s 10 (23C) of the Act is that the relief granted in respect of the previous years by virtue of the Income Tax Appellate Tribunal’s order, was premised on erroneous grounds. Subsequent developments have rendered the revenue’s position untenable.
Disallowance of claim of waiver of Sales Tax Loan claimed as a capital receipt by the assessee by holding it as taxable - Held that:- Mumbai Bench in case of M/s Grasim Industries Ltd.[2011 (3) TMI 1041 - ITAT, Mumbai] with reference to the scheme of the Rajasthan Government has held that the surplus arising out of the pre payment of loan which was credited to the P&L a/c is a capital receipt not liable to tax. In view of these binding precedents of the Special Bench as well as the co-ordinate Bench where this issue has been elaborately dealt with, we hold that the surplus of ₹ 13,30,82,204/- arising on the extinguishment of loan of ₹ 31,74,68,000/- by making pre- payment of the same at ₹ 18,43,85,796/- is a capital receipt on which sec. 41(1) is not applicable. Therefore, we order to delete this addition.
Disallowance of the claim of expenditure incurred on fly ash handling system & expenses for common property work - addition holding that the assessee gets benefit of this facility only for the five consecutive years and the ownership of this property can get transferred to Thermal Station not before five years - Held that:- When the agreement is read as a whole, it becomes evident that the system was installed by the assessee to get the fly ash, which is an important component for manufacturing of cement on a regular basis. Thus, the system is installed by the assessee for the purpose of its business and not for acquiring the capital asset. Further, as per para 2.1 of the agreement, RRVUNL has allowed the assessee to install the system only for collection of fly ash free of cost, initially for a period of 5 years, and as per Para 2.12 of the Agreement, the system becomes the sole property of RRVUNL on the expiry/termination of the agreement. Thus, the entire arrangement has benefited the assessee only by way of free supply of fly ash by incurring the expenditure on installation of the system which become the property of RRVUNL. By allowing 20% of the expenditure, the authorities have accepted that the expenditure is revenue in nature and not a capital expenditure. There is no concept of deferment of expenditure in the I.T. Act. Thus we do not agree with the finding of the ld CIT(A) that the issue is to be approached from commonsense point of view by ignoring the legal provisions of the Act. Therefore, the AO is directed to delete the disallowance made by him. Thus ground no. 2 of the assessee's appeal is allowed.
Disallowance of contribution to District Administration towards construction of hospital at Ramganjmandi by holding that the same cannot be allowed as business expenditure - Held that:- Hon'ble Supreme Court in case of Sri Venkata Satyanarayana Rice Mill Contractors Co. Vs. CIT [1996 (10) TMI 2 - SUPREME Court] has held that any contribution made by an assessee to a public welfare fund which is directly connected or related to the carrying on of the assessee's business or which results in benefit to the assessee's business has to be regarded as an allowable deduction under section 37(1) of the Income-tax Act, 1961. Such a donation, whether voluntary or at the instance of the authorities concerned, when made to a Chief Minister's Drought Relief Fund or a District Welfare Fund established by the District Collector or any other fund for the benefit of the public and with a view to secure benefit to the assessee's business, cannot be regarded as payment opposed to public policy. The mere fact that making of a donation for a charitable or public cause or in public interest results in the Government giving patronage or benefit can be no ground to deny the assessee a deduction of that amount under section 37(1) of the Act when such payment had been made for the purpose of the assessee's business. In view of above, we have no hesitation in deleting the addition - Decided in favour of assessee.
Disallowance of various expenses - AO has made the disallowance by making observation that assessee has failed to produce supporting evidence or expenditure - CIT-A directing the AO to recompute the FBT payable by the assessee on staff welfare expenditure, general expenses, social welfare expenses, gift expenses and sales promotion - Held that:- It is stated that all expenses are duly supported by evidence and therefore such adhoc disallowance is unjustified. It is also pleaded that once FBT is paid on the expenditure claimed, the same cannot be disallowed in the tax computation for which decision of the Co-ordinate Bench is relied upon. We agree with the arguments of the Ld. AR that no adhoc disallowance can be made. We note that assessee has filed the complete details of expenditure as required by the AO. The AO has not specified any particular expenditure which is for personal use or for non business purpose. It is a case of a corporate entity where the contribution made to Gram Panchayat for various welfare measures at a place where the factory of assessee is located as a part of its social obligation is an allowable business expenditure as held in various cases referred in Ground No. 3 above. Further, we agree with the contention of the assessee that once FBT is paid, the expenditure cannot be subject matter of disallowance. The finding of ld CIT(A) that to the extent the expenditure is disallowed, FBT should not be charged is therefore not correct. - Decided in favour of assessee.
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