TMI Blog2001 (2) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... o the charitable institutions on the ground that these institutions are connected with the parties with whom the assessee has business dealings. According to the assessee the donations were given to such institutions in order to maintain better relations with the parties with whom the assessee has business dealings. The Assessing Officer however disallowed the claim of deduction under section 37(1). The CIT(A) upheld the disallowance with the observation that such expenses in the other cases of the group have been held as disallowable by the Tribunal Ahmedabad. 3. Shri R.N. Vepari, the ld. counsel for the assessee pressed the disallowance with respect to the donation of Rs.5 lakhs made to Sahakar Charitable Foundation on the ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Sahakar Charitable Foundation. In the written submissions filed before us it is contended that the donation made to Sahakar Charitable Foundation Trust would fall within the realm of public relation and was not given on philanthrophic motives. The ld. counsel placed reliance on the following decisions in support of the claim of deduction in respect of the donation of Rs.5 lakhs under section 37(1):-- 1. Khimji Visram Sons (Gujarat) (P.) Ltd. v. CIT [1994] 209 ITR 993 (Guj.). 2. Sassoon J. David Co. (P.) Ltd. v. CIT [1979] 118 ITR 261 (SC). 3. AddL CIT v. Kuber Singh Bhagwandas [1979] 118 ITR 379 (MP) (FB). 4. AddL CIT v. Symonds Distributors (P.) Ltd. [1977] 108 ITR 947 (All.). 5. Asstt. CIT v. Hindustan Marketing A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itable institution to whom the donation has been given viz. Sahakar Charitable Foundation is a charitable trust formed for the welfare of the citizens of Vadodara and this institution cannot be treated as an associated or connected concern of Petrofils Co-Op Ltd. 6. We have carefully considered the facts and circumstances of the case and have gone through the string of judicial authorities cited by the ld. counsel. The facts are undisputed that payment of Rs.5 lakhs has been made to a public trust viz. Sahakar Charitable Foundation which has been carrying on charitable activities for the welfare of the citizens of Vadodara city. There is nothing on record to indicate as to whether this trust is in any manner connected with Petrofils Co-O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltruistic considerations and not for the purposes of assessee's business. 7. Regarding the string of judicial authorities cited by the ld. counsel, we may point out that certain broad principles have been spelt out by various Courts governing the deduction of expenditure under section 37(1). These decisions have been rendered in the context of attendant facts and circumstances prevailing in the respective cases. We would specifically refer to the Full Bench Decision of M.P. High Court in Kuber Singh Bhagwandas'case cited by the ld. counsel. This decision has been approved by the Hon'ble Supreme Court in Sri Venkata Satyanarayana Rice Mill Con tractors Co. v. CIT [1997] 223 ITR 101. 8. In Kuber Singh Bhagwandas' case the facts were that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation paid by the merchant. The High Court held that the expenditure had a direct connection with the grant of permits by the Government as the receipts of donations were attached with the applications for permits and such permits were granted in proportion to the donation made. 9. As we have already discussed above the facts of the instant case before us are entirely different inasmuch as the donations made to a public charitable trust are not in any manner linked with the business of the assessee. A mere letter of a customer for considering the generous donation to the charitable trust would not establish the nexus with the business of the assessee. Thus the proposition laid out in the Full Bench decision in Kuber Singh Bhagwandas case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akhs to Sahakar Charitable Foundation has been rightly disallowed by the Assessing Officer under section 37(1). 12. Regarding the alternative contention of the assessee for deduction under section 80G, we would direct the Assessing Officer to consider the claim of the assessee for deduction under section 80G in accordance with law. 13. The next ground is against the disallowance of Rs.15,05,097 on account of royalty paid to M/s. Teijin Seiki Ltd., Japan. The payment of royalty has been disallowed under section 40(a) since tax has been deducted and paid in the subsequent year. The ld. counsel made strong grievance of the fact that for the succeeding assessment year 1992-93 no such deduction has been allowed by the Assessing Officer eve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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