Court allows company's expenses for Puja, Hawan, and Kirtan for employee welfare

The court upheld the allowance of expenses incurred for Puja, Hawan, and Kirtan by a company under section 37(1) of the Income-tax Act, 1961 for the welfare of employees. The Assessing Officer's disallowance was overturned by the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal, citing consistency in treating such expenses as business expenditure in earlier years. The court found no dispute on the burden of proof for treating the expenditure as business expenditure, leading to the dismissal of the appeals.

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Issues involved:
The judgment concerns the allowance of expenses incurred in Puja, Hawan, Kirtan, etc., u/s 37(1) of the Income-tax Act, 1961 for the welfare of employees by a company.

Summary:

Issue 1: Allowance of expenses for Puja, Hawan, Kirtan, etc.
The assessee, a company, had been incurring expenses on Puja, Hawan, and Kirtan for its employees as a welfare measure. The Assessing Officer started disallowing this expenditure from the assessment years 1990-91 to 2001-02, arguing that it was not wholly and exclusively for the business purposes of the assessee. However, the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal allowed the expenditure, citing earlier years where the expenses were treated as business expenditure for welfare measures. The principle of consistency was highlighted, and it was noted that the revenue itself had allowed the expenses from the assessment year 2002-03 onwards. The Tribunal's orders from earlier years supported the view that the expenditure was for the welfare of employees and hence treated as business expenditure.

Issue 2: Burden of proof for treating expenditure as business expenditure
The Revenue argued that the assessee needed to prove that the expenditure was for the welfare of employees and thus could be treated as business expenditure. However, the court found that there was no dispute regarding this aspect in the orders of the authorities below. Therefore, the court concluded that no question of law arose, and the appeals were dismissed accordingly.

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