TaxTMI 
TaxTMI 
2020 (8) TMI 667
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....ioner of Income-tax (Appeals) your Appellant craves to submit that the expenditure incurred was as per the circumstances faced by your Appellant and for which it had spent the amount providing houses for deprived people in pursuant of MOU entered into with the Local Authorities (Deputy Commissioner). 4. The amount of Rs. 1,79,91,250/- spent has a direct nexus to the business activities carried on by your Appellant as it increases the cordial relationship with the Local Authorities which has full authority on the business activities carried on by your Appellant. 5. The Learned Commissioner of Income-tax (Appeals) failed to appreciate the applicability of judicial pronouncements that are referred to in the Assessment Order passed by the Learned Assessing Officer as they are distinguishable with the facts of your Appellant's case and the facts-of judicial pronouncements as referred to. 6. For the grounds of above and the written submissions that may be filed, and also the arguments that may be advanced during the actual hearing, the Hon'ble ITAT, Bangalore, may be pleased to allow the appeal and cancel the impugned order in the interest of equity and justice. 2, The bri....
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.... by the assessee, therefore, he opined that amount claimed under the head social welfare expenditure is not allowable as deduction u/s 37(1) of the Act. Accordingly, disallowed a sum of Rs. 1,79,91,250/- claimed under the head social welfare expenses and added back to the total income. 4. Being aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee has reiterated its arguments made before the A.O. The assessee further submitted that expenditure incurred under the head "Social Welfare Expenditure" is having direct nexus between business activity of the assessee and also there is an element of commercial expediency and hence the same cannot be considered as donations given to Chief Minister relief Fund. The assessee further submitted that since the amount incurred for construction of houses for flood victims is not covered for exemption u/s 80G of the Act, it has claimed deduction u/s 37(1) of the Act as expenditure incurred for the purpose of business and hence the same cannot be disallowed as not incurred for the purpose of business of the assessee. 5. The CIT(A) after considering the relevant submissions of the asse....
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....penditure incurred wholly and exclusively for the purpose of business, which can be allowed u/s 37(1) of the Act. Therefore, there is no reason to deviate from findings recorded by the lower authorities. 8. We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The facts borne out from the records clearly indicates that the assessee has incurred social welfare expenditure for construction of houses to rehabilitate flood victims in the area of Bellary as per MOU, entered into between Government of Karnataka. The said expenditure has been incurred on the basis of MOU, as per which the amount incurred for construction of houses to flood victims is in the nature of donations given to Chief Minister Relief Fund and assessee can claim the benefit of taxes under the Income Tax Act. The A.O. was of the opinion that expenditure incurred for social welfare expenditure is in the nature of donation given to Chief Minister Relief Fund but not in the nature of expenditure incurred wholly and exclusively for the purpose of business, which can be allowed u/s 37(1) of the Act. We find that an identical issue has been co....
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....apart, the work completion certificate has been issued by the Deputy Commissioner, Ballary and it is also certified that a sum of Rs. 2,22,76,162/- has been expended by the assessee for construction of 169 Aasare houses at Gundigana village. Thus, it boils down to the fact that construction of houses has been carried out by the assessee as agreed to under the MOU. 27. Tribunal has rejected the contention of the assessee that expenditure incurred for the purpose of business and the onus being on the assessee has not been discharged. It is also further held that no factual condition was laid by the assessee to establish the expenditure so incurred was for business purpose nor any attempt was made before the lower authorities. It further held that assessee has made a bald assertion. 28. In the light of the analysis of the case laws above referred to, it cannot be gain said by the revenue that contribution made by an assessee to a public welfare cause is not directly connected or related with the carrying on of the assessee's business. As to whether such activity undertaken and discharged by the assessee would benefit to the assessee's business has to be examined in the l....