TaxTMI 
TaxTMI 
2021 (4) TMI 501
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....and hence not an allowable deduction? (ii) Whether on the facts and circumstances of the case, the Tribunal was right in holding that the expenditure incurred towards business should be only in the nature of advertisement by way of sponsorship of sport and not by any other mode? and (iii) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that by providing training through MRF Pace Foundation it does not get huge publicity for allowing the expenditure u/s.37 of the Act?" 3.We have elaborately heard Mr.Vikram Vijayaraghavan, learned counsel for the appellant/assessee for M/s.Subbaraya Aiyar, Padmanabhan and Ramamani; and Mr.T.Ravikumar, learned Senior Standing Counsel appearing for the respondent/Revenue. 4.The issue, which is subject matter of these appeals, pertains to disallowance of the amount of expenditure incurred by the assessee to the tune of Rs. 1.70 Crores for the purpose of establishing MRF Pace Foundation and matters connected therewith. 5.The assessee filed their return of income for the relevant assessment year and the return was initially processed under Section 143(1) of the Act, subsequently, selected for scrutiny an....
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....instead it has formed Pace Foundation for the purpose of training fast bowlers for the game of cricket, the expenditure cannot be treated on par with the expenditure incurred for sponsorship of sports and other events. Further, the Assessing Officer held that the activity of the assessee is purely charitable in nature. 9.The contention of the assessee that they get huge publicity and increased sales was rejected by observing that the Pace Foundation of the assessee-company has been mainly engaged in imparting bowling and training and the expenses cannot be considered as expenses related to sponsorship of cricket wherein, the company will get publicity by way of display of hoardings and media advertisement. Furthermore, it was stated that the assessee exports to 65 countries and among them only a few are cricket playing countries and it is not known as to how promoting bowling activity in one country shall have impact in the promotion of sale of tyres in other countries. Further, the Assessing Officer held that the expenditure incurred for traffic signal and sponsorship of sports etc., cannot be equated with the promotion of cricket by the assessee by way of training the pace bowl....
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....tion, be treated as business activity. Further, the Tribunal observed that if such expenses are allowed to this assessee or any other assessee, they can evade tax by such gimmick. Further, the expenses in question are not for the sponsorship of cricket so as to get publicity through hoardings and media advertisements. That the case of the assessee is it exports its products to 65 countries, out of which some are cricket loving countries and even then it is not known how promoting bowling activity in one country would affect the sale of tyres in other countries. With these observations, the appeals filed by the Revenue were allowed. Challenging the same, the assessee is before us by way of these appeals. 14.Before we examine the correctness of the reasons assigned for reversing the order passed by the CIT(A), we need to take note of the legal position as to how and in what manner, business decisions can be taken by the assessee and whether the Assessing Officer would be justified in deciding what would be best for the assessee and for the health of its business. We are guided by a few decisions, which were relied on by Mr.Vikram Vijayaraghavan. 15.In CIT vs. Dalmia Cemet (Bharat) ....
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....holding that it is never the case of the assessee that what was spent was in the nature of donation, the Assessing Officer cannot draw a parallel or assume certain facts, which are not on record. If such is our conclusion, then the decisions relied on by Mr.T.Ravikumar in the case of Nahar Spinning Mills Ltd. vs. CIT, Ludhiana [(2014) 226 Taxman 364 (Punjab & Haryana)]; CIT vs. Industrial Development Corporation of Orissa Ltd. [(2001) 249 ITR 0401 (Orissa)]; CIT vs. Jeevandas Laljiee & Sons [(2000) 245 ITR 0719 (Madras)]; and CIT vs. Infosys Technologies Ltd. [(2012) 349 ITR 588 (Karnataka)] can never be of any assistance to the case of the Revenue. 19.Mr.T.Ravikumar, placed reliance on the decision in Malayalam Plantations Ltd. (supra) more particularly, the observations in paragraph 8 of the said decision. In fact, the legal issues, which should be culled out from the observations are that the expression "for the purpose of business" is wider in scope than the expression "for the purpose of earning profits". It was further held that the range, for the purpose of business, is wide, it may take in not only the day to day running of a business, but also the rationalization of its a....