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1 - 10 of 24 (0.39 seconds)Section 37 in The Income Tax Act, 1961 [Entire Act]
Section 154 in The Income Tax Act, 1961 [Entire Act]
M/S Sri Venkata Satyanaraynarice Mill ... vs The Commissioner Of Income-Tax,Andhra ... on 25 October, 1996
Sri Venkata Satyanarayan Rice Mills Contractor Co. v. CIT (223 ITR 101) (SC);
Krishna Sahakari Sakhar Karkhana Ltd. vs Deputy Commissioner Of Income-Tax on 23 February, 1993
Krishna Sahakari Sakhar Karkhana Ltd. v. CIT (229 ITR 577) and
Surat Electricity Co. Ltd. v. ACIT (125 ITD 227) (Ahd.)
During the year under consideration, the assessee had claimed an
expenditure of Rs.50,00,000/- u/s 37(1) of the Act which is in the form of
donation given to Shanti Seva Nidhi for the purpose of training and
providing technical knowledge along with diploma courses to the
employees of the assessee company and their children. These students
with qualified diploma degrees are inturn recruited by the assessee
company for their manufacturing division. Thus the amount given to Shanti
Seva Nidhi have resulted in training and providing technical knowledge
along with diploma course to the employees of the assessee company and
their children and who inturn were recruited by the assessee company in
its manufacturing division. Thus, the business purpose of assessee is
fulfilled. Under these facts and circumstances of the case, there is no
justification for disallowance of the expenditure u/s 37(1) of the I.T. Act. We
direct accordingly.
The Commissioner Of Income-Tax,Bombay vs Chandulal Keshavlal & Co., Petlad on 17 February, 1960
Now, we discuss the legal precedents for the above issue which are
several. It is to be noted that several decisions have held a view that if a
payment is incurred for the purpose of the trade of the assesses, it is
deductible even if it may bring a benefit to a third party. The leading case in
this regards is Apex Court decision in the case of CIT vs. Chandulal
Keshav Jal & Co. (38 ITR 601).
Voltas Ltd. vs Deputy Commissioner Of Income-Tax on 12 February, 1997
Voltas Ltd. v. CIT [1994] 207 ITR 47(Bom). - If the case of an assessee is that
what is given by him, though termed as donation is not a donation but business
expenditure and if he satisfies authorities in that regard, there is no bar in
allowing deduction in respect of such payment under section 37(1).
CITv.
Commissioner Of Income Tax vs Kaira Dist. Co-Op. Milk Producers Union ... on 11 July, 2000
Kuber Singh Bhagwandas [1979] 118 ITR 379 (MP)(FB), Delhi Cloth
and General Mills Co. Ltd. v. CIT [1986] 158 ITR 64 (Delhi), CIT v. Kaira
Distt, Co-op, Milk Producer's Union Ltd. [2001] 114 Taxman 215 (Guj) - If
the taxpayer is able to establish a nexus between the donation and the business,
it would be held to be for the purpose of the business and allowable under
section 37(1).
Cit vs Rajasthan Spg. & Wvg. Mills Ltd. on 17 November, 2003
Technocrat Industries 18
The best fit application of the above cases can be found in decision of full bench
of Madhya Pradesh High Court in the case of Addl. Commissioner of Income-
tax Vs. Kuber Singh Bhagwandas (118 ITR 379) wherein the donation made to
Chief Minister Drought Relief Fund was allowed as deduction u/s 37 citing the
fact that the assesses made donation as a matter of commercial expediency.
Further, we can be placed reliance on the decision of CIT vs Rajasthan Spg
&Wvg Mills Ltd. (2005-198 CTR 96 RAJ), wherein the Hon'ble Rajasthan High
Court ruled for allowability of expenses which were incurred wholly and
exclusively for the business of the assessee as the same was for the benefit and
welfare of its employees.
Commissioner Of Income Tax, Bangalore vs Infosys Technologies Ltd on 4 January, 2008
The facts of the present case under consideration are smilarto that of
the case law quoted above. In the present case, the amount donated by
the appellant company was towards employee welfare and also for seeking
benefit of securing trained/skilled personnel for appellant's manufacturing
division. Therefore, as long as there is some benefit accruing to the
appellant company from such contribution and there is live nexus between
the amount spent and promotion of the appellant business, the amount
incurred can be claimed as deduction u/s 37(1), even if partial benefit
accrues to outsiders from such contribution. Further, the Hon'ble Karnataka
High Court in the case of CIT and Anr. V. Infosys Technologies Ltd. (2014)
(360 ITR 714), has opined that CSR donation expenditure which facilities
the business of the assessee is allowable u/s 37(1) of the Act. In addition
to above, reliance could be placed on the following decisions, wherein
Courts have time and again held that contribution made by the assessee
company in public welfare funds which are directly connected or related
with the carrying on the business or which results in benefit to the business
has to be regarded as allowable deduction u/s 37(1) of the Act: