2016 (12) TMI 349

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....g of the said branch. 3. Rival contentions have been heard and record perused. 4. Facts in brief are that the assessee is a firm of Chartered Accountants established in the year 1955. During the year, firm paid a sum of RS.20,00,000 to Pune Branch of Western India Regional Council of The Institute of Chartered Accountants of India as contribution towards construction of a building for the Pune Branch of the Council. The payment was made vide Cheque NO.991364 dated March 27, 2009. The Firm had claimed the aforesaid payment as an expenditure incurred wholly and exclusively for the purposes of the profession and not as a donation deductible u/s - 80G. 5. The learned Assessing Officer has taken a view that it is in the nature of a donation; ....

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....fraternity in Pune for a proper office space wherein all the requisite administrative functions could be discharged at a centralized location and the activities of the professional body would be coordinated smoothly, effectively and efficiently befitting the stature of the branch of the apex accounting body of the country. The said administrative building therefore could provide the necessary infrastructure facilities for the mutual convenience, advantage and benefit of the members and particularly members and aspiring students based in Pune. 8. We also found that for the said purpose the Pune Branch had set up Pune Branch Building Fund and, the Institute has received approval under Section 80 G of the Income Tax Act, 1961 ref. O.DIT (E) 2....

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....ras Chamber of Commerce of which the assessee was a member. The High Court held that the approach needs to be that of a practical and prudent businessman rather than from the Revenue's strict classification of a right. Relying on the decision of the Supreme Court in the case of Sri Venkata Satyanarayana Rice Mill Contractor Co (223 ITR 101) it held that the correct test is that of commercial expediency. In that case' the Supreme Court had held that any contribution made by the assessee to a fund which is directly connected or related to the carrying on of the assessee's business or which results in benefit to the assessee's business, has to be regarded as a deduction allowable under section 37. The Madras High Court held tha....