Law:

Section:

Section 37 of the Income-tax Act, 1961 - Business expenditure - Allowability of - Whether getting advice on industrial, financial and legal matters and spending on it cannot be said to be not laid out for purpose of business - Held, yes - Whether where Tribunal allowed deduction under section 37 in respect of consultancy fees paid by assessee to a company, for advice on legal, financial and industrial matters locally, orally or through news bulletins/information bulletins, there was no irregularity in conclusion arrived at by Tribunal - Held, yes FACTS The Tribunal allowed the deduction of the amount paid by the assessee-company to 'ST' company as consultancy fee under section 37, holding that the 'ST' company was giving advice on legal, financial and industrial matters, locally, orally or through news bulletins/information bulletins. On appeal, the department contended that the directors of the assessee-company as well as 'ST' company were almost one and the same and the services rendered by 'ST' company could not be regarded as a consultancy service, as they had complied various information readily available in the newspapers and journals and put it in the form of booklet, viz., "News Bulletin" and "Information Bulletin", and, therefore, it would not be considered as a consultancy service. HELD The contention of the assessee could not be rejected merely on the reason that the very same service could be obtained from various sources easily as contended by the department. The reasoning given by the Tribunal was perfectly in conformity with the provisions of section 37 which provided for the expenditure to be allowed. What is necessary to get such a benefit is whether the expenditure was laid out for the purpose of the business. Getting advice on industrial, financial and legal matters and spending on it cannot be said to be not laid out for the purpose of the business. Therefore, there was no irregularity in the conclusion arrived at by the Tribunal and there was no reason to take a different view than the one taken by the Tribunal. The appeal, was, therefore, dismissed. Note : The case was decided in favour of the assessee. J. Narayanaswamy for the Appellant.…

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