TMI Blog1997 (2) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... being the donation paid to the Polal Panchayat for upgradation of the school into a High School is an admissible deduction under section 37 of the Income-tax Act, 1961, in the assessment for the assessment year 1973-74 ?" The assessee is a company, during the course of the previous year relevant to the assessment year 1973-74, the assessee made a contribution of a sum of Rs. 35,000 to the Panchayat, where its factory and its premises are situate. The assessee made the said expenditure for upgrading the elementary school of the Panchayat as High School. The assessee claimed the contribution made to the Panchayat as a revenue expenditure. The Income-tax Officer held that the expenditure was not incurred wholly and exclusively for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture nor can it be regarded as personal expenses of the assessee. The only question that has to be decided is whether the expenditure was incurred for the purposes of the business of the assessee. The finding of the Appellate Tribunal is that by making the contribution to the Panchayat for upgrading the elementary school, the assessee-company was assured by the school management that it would give preference in the matter of admission to the children of the employees in the said school. The Tribunal placed reliance on a letter dated March 31, 1973, from the president of the building committee and parents teachers association of the school. It is well settled that if a certain sum of money was expended for the education of the children of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deduction under the provisions of section 37(1) of the Act. We have seen that the contribution made by the assessee to the Panchayat has resulted in a benefit to the assessee's business in the sense that the assessee's employees are the beneficiaries in getting preferential admission in the school. The fact that the benefit has percolated to the general public would not stand in the way of the assessee getting the necessary deduction once the expenditure is held to be business expenditure. Hence, we are of the opinion that the Appellate Tribunal has come to the correct conclusion that the expenditure incurred by the assessee was a revenue expenditure. It should also be noted that the contribution made to the Panchayat was not in contr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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