2019 (2) TMI 1652

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....the grantinaid to the school/institution are allowable under section 37(1) of the Act and the provision of section 40A(9) are not attracted?" 3. Brief facts are as under: Respondent-Indian Oil Corporation Limited ("IOC" for short) is engaged in oil exploration and refining business. It has its installation at various places. In the return filed by the assessee for the assessment year 200607, the Assessing Officer noticed that assessee had claimed deduction of the amounts spent by the assessee in either setting up or providing grantinaid in Kendriya Vidyalaya Schools where students of the employees of the assesseecompany would receive their basic education. The Assessing Officer was of the opinion that the claim would be hit by subsectio....

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....ishnan, Commissioner of IncomeTax Vs. Travancore Cochin Chemicals Ltd. 243 ITR 284  had examined whether the amounts spent by the assessee towards contribution to school in which children of the employees were studying, would be hit by  Section 40A(9) of the Act and therefore, not allowable as deduction under Section 37 of the Act. The High Court had allowed the expenditure and held and observed as under: "13. Learned senior counsel for the Revenue placed reliance on the decision of the Calcutta High Court in CIT v. India Tobacco Company Ltd. [1978] 114 ITR 182. There the assesseecompany constructed a hospital. At the time when the hospital was ready, the Employees' State Insurance Scheme came into operation and the Governme....

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....e assesseecompany more efficiently by having a contented labour force. It was neither a donation covered under Section 40A(9) nor of a capital in nature not covered under Section 37(1) of the Act. Hence, the Tribunal is fully justified in allowing the above expenditure towards contribution for the running of the FACT school, as an expenditure for the smooth functioning of the business of the assessee and also an expenditure wholly and exclusively for the welfare of the employees of the assessee and thus allowable under Section 37(1) as well as Section 40A(10) of the Act. Thus questions Nos. 1 to 3 are answered in favour of the assessee and against the Revenue." 5. Similarly, Bombay High Court in case of Commissioner of Income Tax Vs. Bhar....