TaxTMI 
TaxTMI 
TaxTMI 
2020 (12) TMI 973
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....diency and hence, ought to have been allowed. 3. The learned CIT[A] is not justified in upholding the disallowance made in respect of provision of Audit Fees of Rs. 15,00,000/- holding that the appellant ought to have deducted tax at source on the provision made in terms of section 40[a][ia] of the Act under the facts and in the circumstances of the appellant's case. 4. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs. 3. The Brief facts of the case are that, the assessee is an individual and is engaged in business of trading of iron ore. The Return of income was filed for the Assessment Year 2010-11 on 14.10.2010 with total income of Rs. 125,81,33,780/.-Subsequently, the case was selected for scrutiny under CASS and notice under Section 143(2) and 142(1) of the Act were issued along with questionnaire. In compliance, the learned authorized representative of the assessee appeared from time to time and produced the book....
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....e Act and confirmed the action of the Assessing Officer. In respect of addition of Rs. 15 lakhs being the provision for audit fees, where the assessee has failed to deduct TDS. In the hearing proceedings, the Ld. AR submitted that the provision of audit fees was not credited to the CA Account and was credited to audit fees payable only hence no TDS has been deducted. Whereas the CIT (Appeals) considered the facts and provisions of Section 40(a)(ia) of the Act and observed that TDS has to be deducted even if provisions are made in the books of Accounts wherever TDS provisions are applicable and has confirmed the addition. In respect of other additions the CIT (Appeals) has granted relief and partly allowed the assessee's appeal. Aggrieved by the CIT(A)'s order, the assessee has filed an appeal with the Tribunal. 4. At the time of hearing, the learned Authorized Representative made submissions on the disputed issue of contribution to Bellary Agenda Task Force (BATF) and has reiterated the submissions made before the CIT (Appeals). The Ld. AR emphasized that the contribution made to BATF is wholly and exclusively for the purpose of business and allowable under Section 37(1) o....
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....f CIT Vs. Neelavathi (2010) 322 ITR 643 (Kar), where the amount was paid as contribution to traffic police and rowdies for the protection and maintenance of law and order in the business premises of assessee for running two cinema halls. Whereas in the later Hon'ble High court judgment, the decision of CIT Vs. Infosys Technologies Ltd. 349 ITR 598 (supra) was considered and the amount contributed for fixing the traffic signals was allowed as a deduction under Section 37(1) of the Act. Similarly, we find in the case of Hon'ble High court decision of Kanhaiyalal Dudheria Vs. JCIT 418 ITR 410 (Kar) Dharwad Bench, the decision of CIT Vs. Infosys Technologies Ltd. 360 ITR 714 (supra) was also considered at paras 22 to 25 as under: "22. Yet another Division Bench of this Court in the case of COMMISSIONER OF INCOME TAX & ANR Vs. INFOSYS TECNOLOGIES LTD., reported in (2012) 246 CTR (Kar) 371, held as under: "11. So far as the finding of the Tribunal that contribution of Rs. 6.93 lakhs made towards traffic regulation can be claimed as deduction is also not justified as it is well settled that in order to claim deduction under Section 37 of the Act, the expenditure should be wholly....
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....93 lakhs was contributed towards traffic regulation. It was not an expenditure incurred by the assessee. It was not in the nature of donation made to the police towards traffic regulation. Therefore, in that context, it was held relying on the judgment of Swaminathan's case, it does not qualify as deduction under Section 37 of the Act. 24. As is clear from the case of Mysore Kirloskar Ltd., the expenditure claimed need not be necessarily spent by the assessee. It might be incurred voluntarily and without any necessity, but it must be for promoting the business. 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 37(1) of the Act, if it satisfies otherwise the tests laid down by law. Similarly, the words 'for the purpose of business' used in Section 37(1) of the Act, 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 th....
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....he decision of Kanhaiyalal Dudheria Vs. JCIT 418 ITR 410 (Kar) Dharwad Bench (supra), In the case of Shri Gogga Gurushantiah and Bros. Vs. ACIT/DCIT, Circle 1, Bellary (ITA No. 504/Bang/2014 Dt. 29.05.2020) and allowed the claim at page 4 para 6 of the order as under: "6. We have considered the rival submissions. We find that in para 2 on page 4 of this order, it is noted by learned CIT(A) that in the present case, the payment is not only made by the assessee firm but similar payments have also been made by all the business/industrial houses situated in Bellary and nearby districts depending upon the scale of business. It is also noted by CIT(A) that the present payment has helped the firm in getting goodwill of local citizens, bureaucrats, politicians, press and others. In our considered opinion, when this is admitted by learned CIT(A) that this payment in question will help the firm in getting goodwill of local citizens, bureaucrats, politicians, press and others, this will definitely benefit the assessee firm's business also, may at a later date. Therefore, in our considered opinion, this expenditure is an allowable expenditure under section 37(1) of the Income Tax Act, 19....