TaxTMI 
TaxTMI 
2012 (8) TMI 85
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....r-Book pages 3 to 12). The ld. DR was questioned on this by the Bench, and who conceded thereto, even as he would submit that the Revenue places reliance on the assessment order under reference. Taking us through the relevant part of the tribunal's order, the ld. AR continued, the Revenue's first ground stands covered against it per para 13 of the order in Revenue's appeal for AY 2006-07 (in ITA No. 783/JP/2009), wherein, following its earlier decision, as in the case of the assessment years 2003-04 and 2004-05, the tribunal allowed the compensation paid to the land owners for using their land for extraction of Gypsum; mining being part of the assessee's trade, as revenue expenditure on the basis that it is only a part of the cost of the extraction of Gypsum, and did not give rise to any asset or advantage of enduring nature, as against the Revenue's contention of it being a capital expenditure. Further, the nature of loss in the hands of the payee would be of little consequence in determining the nature of the expenditure in the hands of the payer/person incurring the expenditure. The tribunal has reproduced the relevant part (para 9) of its order for the assessment year 2003-04 (....
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....onfirm the impugned order, deleting the disallowance by placing reliance on the decision by the tribunal in assessee's own case for an earlier year. We decide accordingly. Assessee's C.O.: 03/JP/2012 4. The brief facts are that the assessee's accounts reveal a debit to the profit and loss account in the sum of Rs. 445.20 lacs under the account head 'Donation', of which Rs. 444.00 lacs was by way of donation to the Chief Minister's Relief Fund, eligible for deduction u/s. 80G @ 100%, duly claimed per the return of income. No claim for balance expenditure of Rs. 1.20 lacs was made. On being questioned for verification of the claim u/s. 80G, the assessee per its reply, while justifying its claim u/s. 80G, also requested for grant of deduction u/s. 37(1) in respect of the unclaimed balance expenditure of Rs. 1.20 lacs. The AO disallowed the assessee's claim on the legal ground of being untenable, having not been preferred per the original or the revised return, but by way of a letter, relying on the decision by the hon'ble apex court in the case of Goetz (India) Ltd. vs. CIT (2006) 284 ITR 323 (SC). Even on merits, he was of the view that expenditure is in the nature of donation,....
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....ating the same to be in accordance with law. 6. We have heard the parties, and perused the material on record. 6.1 The primary facts of the case are undisputed; the impugned payments being for and toward the following (ref. written submissions by the assessee): S.No. Name of the party Amount (Rs.) Explanation 1. West Zone Cultural Centre 20,000/- West Zone Cultural Centre has organized an event in the name of 'Umang Utsav' to help the blind and deaf children, at Shilpgram, Udaipur from 04-10-2007 to 08-10-2007. Assessee has given contribution of Rs. 20,000/- for purchase of gift articles for blind and deaf children. 2. Rose Society 50,000/- Amount was paid to Rose Society for sponsorship of Rose Show - 2008 at jaipur 20-01-2008. 3. Maharana Kumbha Sangeet Parishad 50,000/- Amount was paid to Parishad for sponsorship of 46th Maharana Kumbha Sangeet Samaroh on 8th to 10th Feb. 2008 at Udaipur. 6.2 We may begin to discuss the issue on merits. The first thing that strikes us is the untenability in law of the assessee's claim, having not been raised before the assessing authority either per the original or the revised return of in....
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....dl. CIT v. Gurjargravures (P.) Ltd. (1978) 111 ITR 1 (SC) (though there is some difference in the fact-setting for the application of the two decisions as well), on one hand, and NTPC Ltd. v. CIT (supra) and Jute Corporation of India v. CIT (supra), on the other, operate in different fields, even as explained in the said judgments itself. In Jute Corporation of India v. CIT (supra), it stands explained that the decision in the case of Addl. CIT v. Gurjargravures (P.) Ltd. (supra) does not rule out a case where the claim under reference could not be made by the assessee at the stage when the return of income was filed or before the assessment order was made, in which event, as was the case in that case, so that the (first) appellate authority would be justified in entertaining the assessee's claim for the first time. There could be several factors justifying the raising of the new plea in appeal, and each case, therefore, had to be considered on its facts. Clearly, needless to add, the non-raising of the claim before the assessing authority should be bona fide, else the same is ousted for consideration by the appellate authority, even as also clarified by the hon'ble jurisdictional ....
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....e condition of incurring the expenditure wholly and exclusively for the purposes of his business, i.e., for it to be claimed as a business expenditure, is squarely on the assessee (Narendra Mohan Palival v. CIT, 271 ITR 347 (Raj.)). We need not dwell on the law in the matter at any length, the same being trite, and the case law in the matter, legion, while the assessee has not met any of these decisions, including by the jurisdictional high court in the case of Jaswant Trading Co. v. CIT (supra), relied upon by the Revenue. Suffice to state the word 'wholly' refers to quantum and the word 'exclusively' occurring in the qualifying condition of s. 37(1) refers to the motive for incurring the expenditure. The apex court, as far back in The Liquidators of Pursa Ltd. v. CIT (1954) 25 ITR 265 (SC), explained that the words 'for the purposes of the business' only meant it to be for the purpose of enabling the carrying on the business and to earn profits therein. 6.4 Adverting to facts, we would think that the expenses under reference could not be strictly called 'social welfare expenses', and stood rightly considered as 'donation', i.e., as classified per the assessee's audited account....
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.... deduction as provided under section 80G alone is applicable. For the purpose of claiming the benefit under section 37(1), it has to be proved that the expenditure was wholly and exclusively for the purpose of business. There may be a circumstance where an expenditure falls within the category of "wholly and exclusively for the purpose of business or profession" and also under section 80G. In that case the option remains with the assessee to claim the expenditure under either of the aforesaid sections. But where there is no direct nexus to prove that it is wholly and exclusively for the purpose of business or profession, then it cannot be claimed under section 37(1). A future hope for advantage is in the nature of an expectation. The requirement of the section is that there must be a business in existence and the expenditure is wholly and exclusively for the purpose of business.' It was further held that there was no direct nexus established between the expenditure by way of donations and the business of the assessee and, hence, the expenditure was not allowable under section 37(1), but 50 per cent. deduction was allowable under section 80G. Another decision relevant in this regard....
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....ng on of the assessee's business or which results in benefit to the assessee's business has to be regarded as an allowable deduction under section 37(1) of the Income-tax Act, 1961. Such a donation, whether voluntary or at the instance of the authorities concerned, when made to a Chief Minister's Drought Relief Fund or a District Welfare Fund established by the District Collector or any other fund for the benefit of the public and with a view to secure benefit to the assessee's business, cannot be regarded as payment opposed to public policy. The mere fact that making of a donation for a charitable or public cause or in public interest results in the Government giving patronage or benefit can be no ground to deny the assessee a deduction of that amount under section 37(1) of the Act when such payment had been made for the purpose of the assessee's business.' The controversy (in the said case) in fact arose not on account of absence of business expediency, but for the reason that the hon'ble high court, though negatived the Revenue's stand, finding the contribution to the welfare fund as a precondition for the grant of export permits, and thus satisfying the test of commercial ex....