TMI Blog2000 (8) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 37 of the Income tax Act, 1961 ?" Facts : The opposite party is a State Government Corporation. For the assessment year 1983-84, it donated a sum of rupees one lakh to the Chief Minister's Relief Fund and claimed deduction of that amount from its total income. The Assessing Officer disallowed the claim which was confirmed in appeal by the Commissioner of Income-tax (Appeals). Being aggrieved by the aforesaid order, the opposite party preferred a second appeal before the Income-tax Appellate Tribunal contending that the amount donated to the Chief Minister's Relief Fund was allowable under section 37 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The Tribunal in its order dated November 30, 1989, after setting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the majority in the House of Lords, held as follows : "It was made clear in the above cited cases of Usher's Wiltshire Brewery Ltd. v. Bruce [1914] 6 TC 399 (HL) and Smith v. Incorporated Council of Law Reporting for England and Wales [1914] 6 TC 477 (KBD) that a sum of money expended, not of necessity and with a view to a direct and immediate benefit to the trade, but voluntarily and on the grounds of commercial expediency, and in order indirectly to facilitate the carrying on of the business, may yet be expended wholly and exclusively for the purposes of the trade ; . . ." The aforesaid test has been followed with approval by the Supreme Court in a number of decisions, such as CIT v. Chandulal Keshavlal and Co. [1960] 38 ITR 601 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al expediency for the purpose of carrying on its business. Therefore, the loss suffered by the assessee on the sale of the bonds must be regarded as a revenue loss. This court re-examined the facts of the case and found that the investment was not connected with the orders placed by the Government with the assessee and accordingly held that the investment in the loan was a capital asset and the loss was a capital loss. The Supreme Court in appeal reversed the decision of this court and held that the investment did not bring in an asset of a capital nature and that the loss suffered by the assessee was a revenue loss and not a capital loss. In Sri Venkata Satyanarayana Rice Mill Contractors Co v. CIT [1997] 223 ITR 101 (SC), the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment made by it was with a view to secure benefit to its business. There is nothing on record to establish that the donation of the amount to the Chief Minister's Relief Fund was directly connected with and related to carrying on its business. No such finding has also been recorded by the Tribunal. As the opposite party has failed to lay necessary factual matrix for its entitlement to deduction, the question has to be answered in favour of the Revenue which we do as follows : "On the facts and in the circumstances of the case, donation of rupees one lakh made by the opposite party to the Chief Minister's Relief Fund is not allowable as a business expenditure under section 37(1) of the Act." The reference is, accordingly, disposed of. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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