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of <h1>Tribunal allows deduction for contribution to construction of administrative building</h1> <h3>M/s. B.K. Khare And Company Versus ACIT (11) (2), Mumbai</h3> M/s. B.K. Khare And Company Versus ACIT (11) (2), Mumbai - TMI Issues:- Decline of deduction u/s. 37(1) for contribution towards construction of administrative building.Analysis:The appeal was filed against the order of CIT(A) for the assessment year 2009-2010 regarding the decline of deduction u/s. 37(1) for a contribution made by the assessee to the Pune Branch of the Institute of Chartered Accountants of India for the construction of an administrative building. The firm claimed the payment as an expenditure incurred wholly and exclusively for the profession, not as a donation under section 80G. The Assessing Officer considered it a donation, stating that section 80G provisions override section 37(1) and that the purpose was not proven to be exclusively for the firm.The Pune Branch of the Western India Regional Council of ICAI planned to construct a building for administrative purposes, including various facilities for members and students. The branch raised funds through donations and contributions to partly fund the total cost. The administrative building aimed to provide infrastructure for the benefit of members and students in Pune. The Pune Branch had set up a Building Fund and obtained approval under Section 80G of the Income Tax Act valid up to a certain date. The firm's contribution was deemed to have a direct nexus with the profession, attracting good Articled Clerks and enhancing professional activities.Judicial pronouncements were considered, such as the Supreme Court's decision in S A BUILDERS emphasizing commercial expediency and the Madras High Court's ruling in CHEMICALS AND PLASTICS INDIA LTD supporting deductions related to business benefits. Other cases like Rupsa Rice Mills, Shree Rajasthan Syntex Ltd, and Hindustan Petroleum Corporation Ltd were cited to support deductions for contributions towards construction projects benefiting the business. The Tribunal concluded that if the claim is allowable under section 37(1), there is no need to proceed to Chapter VIA, applicable to all assesses irrespective of business or profession.Based on the above analysis and judicial precedents, the Tribunal directed the Assessing Officer to allow the contribution made by the assessee under Section 37(1) of the Act, ultimately allowing the appeal of the assessee.
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