2000 (8) TMI 27

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.... Fund was allowable as a business expenditure under section 37 of the Income tax Act, 1961 ?" Facts : The opposite party is a State Government Corporation. For the assessment year 1983-84, it donated a sum of rupees one lakh to the Chief Minister's Relief Fund and claimed deduction of that amount from its total income. The Assessing Officer disallowed the claim which was confirmed in appeal by the Commissioner of Income-tax (Appeals). Being aggrieved by the aforesaid order, the opposite party preferred a second appeal before the Income-tax Appellate Tribunal contending that the amount donated to the Chief Minister's Relief Fund was allowable under section 37 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The Tr....

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.... [1925] 10 TC 155, 191 (HL), Viscount Cave L. C., speaking for the majority in the House of Lords, held as follows : "It was made clear in the above cited cases of Usher's Wiltshire Brewery Ltd. v. Bruce [1914] 6 TC 399 (HL) and Smith v. Incorporated Council of Law Reporting for England and Wales [1914] 6 TC 477 (KBD) that a sum of money expended, not of necessity and with a view to a direct and immediate benefit to the trade, but voluntarily and on the grounds of commercial expediency, and in order indirectly to facilitate the carrying on of the business, may yet be expended wholly and exclusively for the purposes of the trade ; . . ." The aforesaid test has been followed with approval by the Supreme Court in a number of decisions, s....

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....oost its business and such investment was made by way of commercial expediency for the purpose of carrying on its business. Therefore, the loss suffered by the assessee on the sale of the bonds must be regarded as a revenue loss. This court re-examined the facts of the case and found that the investment was not connected with the orders placed by the Government with the assessee and accordingly held that the investment in the loan was a capital asset and the loss was a capital loss. The Supreme Court in appeal reversed the decision of this court and held that the investment did not bring in an asset of a capital nature and that the loss suffered by the assessee was a revenue loss and not a capital loss. In Sri Venkata Satyanarayana Ri....