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| The Tax Publishers2020 TaxPub(DT) 3377 (Bang-Trib) INCOME TAX ACT, 1961
Section 37(1)
Since assessee incurred expenditure under the head Social Welfare Expenditure for construction of houses to flood vitims not only as a social responsibility but also keeping in mind goodwill and benefit, it would yield in long run in earning profit, expenditure was in realm of business expenditure allowable under section 37(1).
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Business expenditure - Allowability - Expenditure incurred under the head Social Welfare Expenditure for construction of houses to flood vitims -
Assessee incurred social welfare expendiure for construction of houses to rehabilitate flood victims in the area of Bellary as per MoU, entered into between Government of Karnataka. AO disallowed deduction thereof holding that expenditure was 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 could be allowed under section 37(1). Held: Since assessee incurred concerned expenditure not only as a social responsibility but also keeping in mind goodwill and benefit, it would yield in long run in earning profit, expenditure was in realm of business expenditure allowable under section 37(1).
Followed:Kanhiyalal Dudheria v. JCIT (2020) 113 Taxmann.com 217 (Karn) : 2019 TaxPub(DT) 6095 (Karn-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2011-12
IN THE ITAT, BANGALORE BENCH
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