TaxTMI 
TaxTMI 
2019 (8) TMI 1288
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...." 3. The facts giving rise to this tax appeal be summarized as under : 3.1 The assessee-company filed its Return of Income for the A.Y. 2010-11 electronically with digital signature on 29/09/2010 declaring its total income at Rs. 293,22,38,330/-. Later, on 24/11/2011, the company filed its revised return declaring its total income to the tune of Rs. 292,11,96,415/-. The return of income filed was processed under Section 143(1) of the Act, 1961 accepting the total income as returned by the assessee-company. 3.2 The case was selected for scrutiny under the CASS and in such circumstances, a statutory notice under Section 143(2) of the Act was issued by the DCIT, Bharuch Circle, Bharuch dated 26/08/2011. Later, a notice under Section 142(1) of the Act was issued by the DCIT, Bharuch Circle, Bharuch on 11/07/2012. The case thereafter, was assigned to the Additional CIT, Bharuch Range, Bharuch by the CIT-III, Baroda vide order passed under Section 120 of the Act. Accordingly, a notice under Section 142(1) read with Section 129 of the Act, 1961 alongwith the questionnaire was issued to the assessee by the Additional CIT, Bharuch Range, Bahruch on 19/11/2012. ....
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....ble growth and economic development. The then Minister of Corporate Affairs while addressing conference of Company Secretary at Kolkata had said that "CSR is no longer charity or philanthropy; instead it should be imbibed in the corporate culture that leads to responsible business." Company has incurred the following expenses in fulfillment of its corporate social responsibility and has been claimed as deduction u/s 37 of the Income tax Act : Name of the Institution Particulars in Brief Amount in 1 Shramik Vikas Sansthan Cost of purchase of Amber Charkhas for tribal women under the scheme of Khadi Board. 70000 2 Shramik Vikas Sansthan For construction of Hostel for 50 boys and 50 girls at Bhekhadia village. 600000 3 Narmada Rural Development Society Contribution towards providing Potable Drinking Water in the Villages of Bharuch District. 13769440 4 Narmada Rural Development Society For up gradation of E-Gram programme to Village Computer Entrepreneurs (VCE) 341600 5 Higher Education Support Trust For helping poor children for Higher Education 110000 ....
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....s income as held by various judicial authorities. From the aforesaid discussion it follows 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 or which results in benefit to the assessee's business has to be regarded as an allowable deduction under section 37(1) of the Act. 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. It is not as if the payment in the present case had been made as an illegal gratification. There is no law which prohibits the making of such a donation. 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 ....
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....eme Court in the case of Sri Venkata Satyanarayana Rice Mill Contractors Co. V/s CIT. Wherein the Hon'ble High Court has also considered submission of the assessee. Relevant portion of the said submission is as under : "....... actually the donation had been given to NIRDES as per order of Gujarat State Government who was a major share holder in the assessee company. Moreover, it was in the interest of the company also because the assessee company being a fertilizer producing company, the future prospects for the assessee were better because of expansion of irrigated area of land and the prospective demand of fertilizer for agricultural activities therein ......" The assessee failed to bring any material on the record which can connect these payments with the provisions of sec. 37(1) of the I.T. Act, 1961. However, from the list of above payments, it appears that contribution of 4,50,000/- made to Gujarat Coop. Onion Grovers Federation Ltd. for storage facility of onion to Small and Marginal farmers at Bhavnagar may be in the business interest of the company because the assessee company is a fertilizer producing and its contribution for storage facility of onion t....
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....or the purpose of the business of the assessee. The word "wholly" refers to the quantum of the expenditure and the word "exclusively" refers to the motive, objective and the purpose of the expenditure. It is clear that if the expenditure has been incurred for promoting the business and earn profit, even if in the long run, the expenditure will be allowable as deduction. In order to claim deduction u/s 37(1), the money must be expended to directly or indirectly facilitate the business of the assessee. In this case, the efforts of the assessee in contributing to various agencies efforts to provide education, health-care, vocational employment etc. are laudable and for its efforts, it is eligible for deduction u/s 80G, where ever applicable, and the Assessing Officer has also allowed it at the rate of 50%. However, what has been frowned upon by the Assessing Officer, is the efforts of the assessee to get 100% deduction by claiming all these expenses u/s 37(1) of the Act, without fulfilling the pre conditions of section 37(1). Perusal of the submissions and the records reveals that the assessee has failed to establish that the claimed expenditure was incurred wholly and exclusively for....
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....wherein the Tribunal has upheld the contribution made to the Chief Minister Earth Quake Relief Fund and contribution to the State Government as business expenditure for A.Y. 1994-95 and 1995-96 by treating the case where in the nature of commercial expediency as allowable as a revenue expenditure. 36. In the light of the above, we find no infirmity in the order of CIT(A), accordingly same is uphold, therefore, this ground of appeal is dismissed." 20. In the light of above facts we find that the issue is covered in favour of the assessee, therefore, respectfully following the same this ground of appeal of the Assessee is allowed. 21. In the result, appeal of the Assessee is partly allowed." 3.8 Thus, the Appellate Tribunal relied on its earlier order passed for the Assessment Year 2009-10 and took the view that the assessee-company was entitled to claim deduction towards the expenditure incurred for discharging its corporate social responsibility under Section 37(1) of the Act. 3.9 The Revenue being dissatisfied with the order passed by the Appellate Tribunal has come up with the present appeal. 3.10 The challenge to the or....
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..... CIT(A) & Anr. reported in (2007) 288 ITR 1 (SC) and (2) CIT vs. Nainital Bank Ltd. reported in (1966) 62 ITR 638 (SC). 5.1 On the main issue as regards Section 37(1) of the Act, Mr.Shah has placed reliance on the following decisions : (1) CIT vs. Dhanrajgirji Raja Narasingirji, (1973) 91 ITR 544 (SC); (2) Sassoon J. David and Co. (P) Ltd. vs. CIT, (1979) 118 ITR 261 (SC); (3) Mysore Kirloskar Ltd. vs. CIT, (1987) 166 ITR 836 (Kar); (4) Sri Venkata Satyanarayana Rice Mill Contractors Co. vs. CIT, (1997) 223 ITR 101 (SC); (5) CIT vs. Madras Refineries Ltd., (2004) 266 ITR 170 (Mad); (6) CIT vs. Cheran Transport Corporation Ltd., (1996) 219 ITR 203 (Mad); (7) CIT vs. Chemicals and Plastics India Ltd., (2007) 292 ITR 115 (Mad); (8) CIT vs. Vatika Township P. Ltd., (2014) 367 ITR 466 (SC); (9) ACIT vs. Jindal Power Ltd. (2016) 70 taxmann.com 389 (Raipur- Trib) ANALYSIS :- 6. We take notice of the fact that the Appellate Tribunal relied on its earlier order passed on the very same issue for the Assessment Year 2009-10. The order passed by the Appellate Tribunal for the Assessment Year 2009-10 on t....
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....ions in the income; such questions if decided by a Court on a reference made to it would be res judicata in that the same question cannot be subsequently agitated." 14. One of the decisions referred to by the Full Bench was the case of Hoystead & Ors. v. Commissioner of Taxation, 1926 AC 155. Speaking for the Judicial Committee Lord Shaw stated: "Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be proper apprehension by the Court of the legal result either of the construction of the document or the weight of certain circumstances. If this were permitted litigation would have no end, except when legal ingenuity is exhausted. It is a principal of law that this cannot be permitted, and there is abundant authority reiterating that principle. Thirdly, the same principle - namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be....
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.... that although the doctrine of res judicata did not strictly apply to the income-tax proceedings, yet in order to maintain consistency, the revenue cannot be permitted to rake up stale issues all over again merely because the scope of appeal is wider than the scope of reference. In this case, the assessee had been granted exemption under Section 11 for a long period of years and without there being any change in the objects or activities of the assessee, the income-tax authorities sought to deny the exemption in a later year. In the case of Neo Polypack (supra) it was held that although the doctrine of res judicata is not applicable to the income-tax proceedings since each assessment year is independent of the other, yet where an issue has been considered and decided consistently in a number of earlier years in a particular manner the same view should continue to prevail in the subsequent years unless there is some material change in the facts. In the case of Allied Finance (P) Ltd. (supra), the Tribunal had decided an issue in favour of the assessee by two orders and those two orders were followed by the Tribunal in the subsequent appeals. The department had accepted the correctne....
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....a consistent view has been taken in favour of the assessee on the question raised, starting with the assessment year 1992-93, that the benefits under the advance licences or under the duty entitlement pass book do not represent the real income of the assessee. Consequently, there is no reason for us to take a different view unless there are very convincing reasons, none of which have been pointed out by the learned counsel for the Revenue. 29. In Radhasoami Satsang v. CIT [1992] 193 ITR 321 (SC) this court did not think it appropriate to allow the reconsideration of an issue for a subsequent assessment year if the same "fundamental aspect" permeates in different assessment years. In arriving at this conclusion, this court referred to an interesting passage from Hoystead v. Commissioner of Taxation [1926] AC 155 (PC) wherein it was said (page 328 of 193 ITR) : "Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be proper apprehension by the Court of the legal result either of the construction of the document or the weight of certain circumstances. ....
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.... did make imports and did derive benefits under the advance licence and the duty entitlement pass book and paid tax thereon. Therefore, it is not as if the Revenue has been deprived of any tax. We are told that the rate of tax remained the sane in the present assessment year as well as in the subsequent assessment year. Therefore, the dispute raised by the Revenue is entirely academic or at best may have a minor tax effect. There was, therefore, no need for the Revenue to continue with this litigation when it was quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to the public coffers." 6.9 Section 37 of the Act reads as under : "Section 37 :(1) Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession". [Explanation 1. - For the removal of doubts, it is hereby declared that....
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....nue. We may quote relevant observations : "The amounts paid by the assessee-company to the directors of its subsidiary companies can be admissible as a deduction under s. 10(2)(xv) of the 1922 Act or s. 37(1) of the 1961 Act only if they can be regarded as expenditure "laid out or expended wholly and exclusively for the purposes of the business" of the assessee-company. This expression was also used in the IT Act, 1918 in U.K. In Atherton vs. British Insulated & Helsby Cables Ltd. (1925) 10 Tax Cases 155 (HL), Viscount Cave, L.C., has thus explained the said expression : "..... 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." These observations have been referred to with approval by this Court while construing s. 10(2)(xv) of the 1922 Act. [See Eastern Investments Ltd. vs. CIT [1951] 20 ITR 1; CIT vs. Chandulal Keshavlal & Co. [1960] 38 ITR 601. In Travancore Titanium Products Ltd. vs. C....
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....in paragraph 10, to discharge their social responsibility. In support, the respondentassessee placed reliance upon the judgment of the Madras High Court in Commissioner of Income Tax vs. Madras Refineries Limited (2004 Vol.266 ITR 170). 14. Mr.Rajesh Chander, learned counsel for the respondent-assessee, at the outset, invited our attention to the very same judgment of the Madras High Court and submitted that the concept of business is not static and it has evolved over a period of time to include within its fold the concrete expression of care and concern for the society at large and the people of the locality in which the business is located in particular. He submitted that the respondent-assessee being a good corporate citizen, in order to bring goodwill of the local citizen and so also to maintain good relations with the regulatory agencies and the society at large and thereby creating an atmosphere in which the business can succeed in a greater measure with the aid of such goodwill incurred the aforesaid expenditure. In support of his contention, he also pressed into service the test of commercial expediency. He submitted that in applying the test of commercial expedie....
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.... of the order of the Assessing Officer and so also the order of the appellate authority in ITA No.68 of 2007, it appears to us that the expenses contributed for religious functions, charitable institutions, social clubs and charity such as donating a borewell to the municipality, etc. would not fall within the expenditure contemplated under Section 37(1) of the Act. Section 37(1) of the Act states that any expenditure not being expenditure of the nature described in Sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee, laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession". It is not the case of assessee that the expenditure incurred by them is covered by Sections 30 to 36 of the Act, and even if that was so the question of allowing the expenditure under Section 37(1) of the Act would not arise. 18. In our opinion, the expenditure towards the religious funds, charitable institutions, social clubs or for charity do not stand to the test of commercial expediency. In any case, ....
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.... effect, though not in terms, negativing the Crowns contentions, I think that there was ample material to support the findings of the CIT, and accordingly hold that this prohibition does not apply." 8.1 Thus, the aforesaid makes it clear that even if an expense is incurred voluntarily it may still be construed as "wholly and exclusively". Explaining this principle, the Hon'ble Supreme Court has, in the case of Sassoon J David & Co. (P) Ltd. vs. CIT [(1979) 118 ITR 261 (SC)] inter alia observed that : "It has to be observed here that the expression "wholly and exclusively" used in s. 10(2)(xv) of the Act does not mean "necessarily". Ordinarily, it is for the assessee to decide whether any expenditure should be incurred in the course of his or its business. Such expenditure may be incurred voluntarily and without any necessity and if it is incurred for promoting the business and to earn profits, the assessee can claim deduction under s. 10(2) (xv) of the Act even though there was no compelling necessity to incur such expenditure. It is I.T.A. No.99/BLPR/2012 Assessment year: 2008-09 relevant to refer at this stage to the legislative history of s. 37 of the IT Act, 1961, w....
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....ervation has also been made in CIT v. Birla Cottom Spg. And Wvg. Mills Ltd. [1971] 82 ITR 166, where the Supreme Court expressed the view that the expression 'for the purpose of the business' is essentially wider than the expression "for the purpose of earning profits". The decision in Malayalam Plantations has been freely drawn upon by courts for laying down that the provisions of s. 37(1) and similar provisions of s. 10(2)(xv) of the 1922 Act in which the expression "for the purposes of the business" is used, have wider implication than the provisions of s. 10(2) of the 1922 Act which used the words "for the purpose of....... earning such.... profits" and the provisions of s. 57(iii) in which the expression "for the purpose of making or earning such income" is used. (See for example, Padmavati Jaykrishna's case [1975] 101 ITR 153). That this view is justified is amply borne out by the different approaches adopted in two decisions of the Supreme Court in relation to a claim for deduction in respect of the same item of expenditure. In T. S. Krishna v. CIT [1973] 87 ITR 429 (SC), a claim for deduction in respect of wealth-tax paid on shares held by the assessee was held to be not a ....
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....ii) use the expression "for the purpose of" in conjunction with the words "making or earning of income" from "other sources". The nexus thereunder must, therefore, be between the expenditure incurred and the income earned and not between the expenditure incurred and the activity which is the source of the income. [See Virmati Ramkrishna v/s Commissioner of Income-tax, Gujarat - III, 1981 (131) ITR 659 ]. 8.7 We may refer to a decision of the Karnataka High Court in the case of Mysore Kirloskar Ltd. v. CIT [1987] 166 ITR 836 1. The Court observed : "While 'the basic requirements for invoking sections 37(1) and 80G are quite different', 'but nonetheless the two sections are not mutually exclusive'. Thus, there are overlapping areas between the donations given by the assessee and the business expenditure incurred by the assessee. In other words, there can be certain amounts, though in the nature of donations, and nonetheless, these amounts may be deductible under section 37(1) as well. Therefore, merely because an expenditure is in the nature of donation, or, to use the words of the CIT(A), 'promoted by altruistic motives', it does not cease t....
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....d over a period of time to include within its fold the concrete expression of care and concern for the society at large and the locality in which business is located in particular. Being a good corporate citizen brings goodwill of the local community as also with the regulatory agencies and society at large, thereby creating an atmosphere in which the business can succeed in a greater measure with the aid of such goodwill ......." 8.10 We have also noted that the amendment in the scheme of Section 37(1) is not specifically stated to be retrospective and the said Explanation is inserted only with effect from 1st April 2015. In this view of the matter also, there is no reason to hold this provision to be retrospective in application. As a matter of fact, the amendment in law, which was accompanied by the statutory requirement with regard to discharging the corporate social responsibility, is a disabling provision which puts an additional tax burden on the assessee in the sense that the expenses that the assessee is required to incur, under a statutory obligation, in the course of his business are not allowed deduction in the computation of income. This disallowance is restricted t....
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....lery as a person of ordinary prudence would take under similar circumstances of his own jewellery of the same bulk, quantity and value, and the bank having provided an adequate number of watchmen, it was not liable for the loss of the property pledged. Granting that, on proof that it had taken as much care of the jewellery pledged with it as it would have taken if it belonged to it, the bank could enforce its rights and recover the full amount due from the constituents, the question still remains whether in admitting liability for the value of the jewellery pledged, the bank laid out expenditure for the purpose of the business. The question is not about the strict enforcement of the legal rights and obligations between the bank and its constituents. The sole question is whether the bank in incurring the expenditure acted in the interest of and for the purpose of its business. The bank is carrying on banking business and advances loans on the security of jewellery. The credit of a banking business is very sensitive : it largely thrives upon the confidence the management which its constituents have in its management. To maintain that confidence the management has often to make ....
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....ds, whether the transaction in respect of which proceedings are taken arose out of and was incidental to the assessee's business. Further, we have to see whether the expenditure in question was bona fide incurred wholly and exclusively for the purpose of business : see Commissioner of Income-tax v. Birla Cotton Spinning and Weaving Mills Ltd. It is true that in some of the cases this court has held that an expenditure incurred by an accused assessee to defend himself against a criminal charge did not fall within the scope of section 10(2)(xv). Those decisions were rendered on the facts of those cases. That is not eh position in this case. On the findings arrived at by the Tribunal, it is clear that the assessee had incurred the expenditure in question for the purpose of his business. The learned counsel for the revenue urged that there was no necessity for the assessee to incur that expenditure, as the prosecution was launched by the Government. It was not urged, and it could not have been urged, that the expenditure was not bona fide incurred. The Tribunal has come to the conclusion that the expenditure in question has been incurred. The contention that, as the Government was cond....
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...., which corresponds to s.10(2)(xv) of the Act. An attempt was made in the I.T. Bill of 1961 to lay down the "necessity" of the expenditure as a condition for claiming deduction under s. 37. Section 37(1) in the Bill read "any expenditure ...... laid out of expended wholly, necessarily and exclusively for the purpose of the business or profession shall be allowed .........." The introduction of the word "necessarily" in the above section resulted in public protest. Consequently, when s. 37 was finally enacted into law, the word "necessarily"came to be dropped. The fact that somebody other than the assessee is also benefited by the expenditure should not come in the way of an expenditure being allowed by way of deduction under s.10(2)(xv) of the Act if it satisfies otherwise the tests laid down by law. This view is in accord with the following observations made by this court in CIT v. Chandulal Keshavlal & Co. [1960] 3 SCR 38 at page 48; 38 ITR 601, 610 (SC) : "Another fact that emerges from these cases is that if the expense is incurred for fostering the business of another only or was made by way of distribution of profits or was wholly gratuitous or for some improper or o....
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....tern Investments Ltd. v. CIT [1951] 20 ITR 1, CIT v. Chandulal Keshavlal and Co. [1960] 38 ITR 601, etc. 25. In our opinion, the High Court as well as the Tribunal and other Income-tax authorities should have approved the question of allowability of interest on the borrowed funds from the above angle. In other words, the High Court and other authorities should have enquired as to whether the interest free loan was given to the sister company (which is a subsidiary of the assessee) as a measure of commercial expediency, and if it was, it should have been allowed. 26. The expression "commercial expediency" is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency. 27. No doubt, as held in Madhav Prasad Jatia v. CIT [1979] 118 ITR 200 (SC), if the borrowed amount was donated for some sentimental or personal reasons and not on the ground of commercial expediency, the interest thereon could not have been allowed under secti....
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....t advanced to the subsidiary or associated company or any other party was advanced as a measure of commercial expediency. We are of the opinion that the view taken by the Tribunal in Phaltan Sugar Works Ltd. [1994] 208 ITR 989 (Bom.) that the interest was deductible as the amount was advanced to the subsidiary company as a measure of commercial expediency is the correct view, and the view taken by the Bombay High Court which set aside the aforesaid decision is not correct. 34. Similarly, the view taken by the Bombay High Court in Phaltan Sugar Works Ltd. v. CIT [1995] 215 ITR 377 that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the business or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. No businessman can be compelled to maximize his profit. The Income-tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authori....
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.... finally enacted into law, the word 'necessarily' came to be dropped. The fact that somebody other than the assessee is also benefited by the expenditure should not come in the way of an expenditure being allowed by way of deduction under section 10(2)(xv) of the Act if it satisfies otherwise the tests laid down by law." Again, the words "for the purpose of business" used in section 37(1) should not be limited to the meaning of "earning profit alone". Business expediency or commercial expediency may require providing facilities like schools, hospitals, etc., for the employees or their children or for the children of the ex-employees. The employees of today may become the ex-employees tomorrow. Any expenditure laid out or expended for their benefit, if it satisfies the other requirements, must be allowed as deduction under section 37(1) of the Act. It may also be stated, as observed by the Supreme Court in the aforesaid case, that the fact that somebody other than the assessee is also benefited or incidentally takes advantage of the provision made, should not come in the way of the expenditure being allowed as a deduction under section 37(1) of the Act. But, nevertheless, i....
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....ly untenable. The establishment of the school was primarily to provide facilities for the education of the children of the employees and exemployees of the assessee. Any expenditure incurred in connection therewith could be claimed as deduction. Merely because some children other than those of the employees and ex-employees are also admitted to the school, the expenditure incurred in connection with the activities of the school cannot be disallowed under section 37(1)." 9.6 In Sri Venkata Satyanarayana Rice Mill Contractors Co. (supra) the appellant was engaged in the business of exporting rice from the State of Andhra Pradesh. Rice could not be exported without the permit from the District Collector. The permits were given only if the payment was made to a Welfare Fund which had been established. The Income-tax Officer disallowed the deduction by holding that the said payment was neither mandatory nor statutory but, was only discretionary. The Income-tax Officer further observed that the welfare fund had not been approved by the Commissioner of Income-tax under Section 80G and, therefore, the contribution to it could not be deducted. While allowing the appeal filed by the....
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....a deduction. On further appeal to the Tribunal, the Tribunal, after examining the records placed before it and having been satisfied that the money had in fact been spent in the manner claimed by the assessee, held that winning the goodwill of the people of the locality, helps in boosting the business in many ways. It allowed the entire amount claimed as a deduction. The concept of business is not static. It has evolved over a period of time to include within its fold the concrete expression of care and concern for the society at large and the people of the locality in which the business is located in particular. Being known as a good corporate citizen brings goodwill of the local community, as also with the regulatory agencies and the society at large, thereby creating an atmosphere in which the business can succeed in a greater measure with the aid of such goodwill. Monies spent for bringing drinking water as also for establishing or improving the school meant for the residents of the locality in which the business is situated cannot be regarded as being wholly outside the ambit of the business concerns of the assessee, especially where the undertaking owned by ....
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........ What is decisive is the nature of business, the nature of the expenditure, the nature of the right acquired, and their relation inter se, and this is the only key to resolve the issue in the light of the general principles, which are followed in such cases." 7. In the case reported in [1969] 72 ITR 137 (Mad) (CIT v. Ashok Leyland Ltd.) which was affirmed by the Supreme Court in [1972] 86 ITR 549 (CIT v. Ashok Leyland Ltd.), explaining the position of law, this court stated as follows (page 143) : "The facts of each case, the attendant circumstances revolving around the expenditure, the aim, object and purpose of the same, their impact on the assessee, particularly in matters relating to the future of the assessee's trade and business, whether it could be sustained on ordinary canons of commercial expediency simpliciter, whether it is a step-in-aid of future expansion or prolongation of life of an existing business, whether it is to secure an enduring benefit, whether the expenditure constitutes conceivable nucleus to form the foundation for the posterior profit earning, whether the expenditure could be viewed as an integral part of the conduct of the busi....
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.... by the company is for the Chamber of commerce whose activities are closely linked with the welfare of the corporate entities who are members therein and whose interest are taken care of by the Chamber of Commerce, irrespective of whether the expense incurred is compulsory or otherwise. Hence, considering the fact that the payment is made for the purpose of the business, it satisfies the commercial expediency test to accept the case of the assessee. In the circumstances, we do not find any justification to accept the case of the Revenue that the provisions of section 137 have to be viewed in a very strict manner. It may be noted that section 137 itself is concerned with "an expenditure laid out or expended wholly or exclusively for the purpose of the business or profession" to qualify for deduction. With the necessity no longer a valid test, we reject the Revenue's appeal." 9.10 In Vatika Township P. Ltd. (supra), the Supreme Court held as under : "31. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospecti....
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....ing it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Government of India v. Indian Tobacco Association [2005] 7 SCC 396, the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a stature was retrospective in nature, was applied in the case of Vijay v. State of Maharashtra [2006] 6 SCC 289. It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are confronted with any such situation here." 10. Thus, the sum and substance of the principle discernible from the above noted decisions is that the concept of business is not static. It has evolved over a period of time to include within its fold the concrete expression of care and concern for the society at large and the people of the locality in which the business is located in particular. The assesseecompany in the case on hand is engaged in the b....