TaxTMI 
TaxTMI 
2005 (5) TMI 280
X X X X Extracts X X X X
X X X X Extracts X X X X
....es. 2. We have heard the rival submissions in the light of materials placed before us and precedents relied upon. Para-14 of Schedule-24 on page 36 of Notes annexed to and forming part of balance sheet arid profit and loss account is reproduced here as under: "During the year, the company subscribed to the Public Issue of M/s. TNPL and was allowed 7,00,000 equity shards. The company has received brokerage amounting to Rs. 11,55,000 for subscribing to these shares which has been adjusted to the cost. Out of 7,00,000 shares, the company sold 2,00,000 shares and earned a net profit of Rs. 25,47,500. The Government of Tamil Nadu's permission for investment as well as sale of the shares are awaited. On 25-1-1996, the company received the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....received as a trading receipt, cannot become a trading receipt by influx of time. Whenever there is receipt of an amount by an assessee, it is not the nature of the receipt under the general law that determines its nature for the purposes of Income-tax Act but the receipt would have to be considered under the provisions of the Income-tax Act from the commercial point of view. Income-tax is a tax on income. But the word 'income' is a dark cat in the bag of the Income-tax Code. There is no exhaustive definition of the word 'income'. The definition is only enumerative. For the present we are concerned whether the receipt in question could be construed to be capital receipt or revenue receipt. 6. We have considered the entire c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....therefore, decide this issue in favour of the assessee and against the Revenue. 7. The next issue relates to the claim for deduction towards construction of noon-meal center and school building. The ld. Counsel for the assessee for the first time placed before us a letter dated 11-12-1991 addressed by Tmt. R. Indirakumari, Social Welfare Minister, Government of Tamil Nadu, Fort St. George, Chennai-9 to Thiru A. N. Dyaneswaran, IAS, Managing Director of the assessee-company. The English translation of this letter reads as under: "As TAMIN has come forward to take up Renovation of Nutritious Noon Meals Centres at Chennai, the Hon'ble Chief Minister of Tamil Nadu has consented to provide all public sector undertakings contribution of 5 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... CIT [1997] 223 ITR 101. In this case the Hon'ble Supreme Court has held that any contribution made by an assessee to a public welfare fund which is directly connected or related with the carrying on of the assessee's business of which results any benefit to the assessee's business has to be regarded as an allowable deduction under section 37(1) of the Act. It is, therefore, important to see that whether the contribution was made towards the welfare fund or directly connected or related with the carrying on of the assessee's business. The Apex Court further indicated that such contribution must result in benefit to the assessee's business. Did the assessee earn any extra profit by making such donation or earn any busines....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... made. There is absolutely nothing on record to indicate that the assessee did acquire any business advantage out of such expenses. It transpires from the perusal of letters submitted that assessee was required to contribute to renovate noon-meal centres before the Chief Minister's birthday, besides the Hon'ble Chief Minister had ordered to take up the question of exemption of this expenditure under the Income-tax Act to those who made the contribution. There is absolutely no business nexus with these expenses. As such, it cannot be allowed under section 37(1). 10. The next issue relates to the allowability of expenditure incurred towards contribution to Tamil Nadu Basket Ball Association in connection with SAF Games. Here also the....