Law:

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Section 37(1) of the Income-tax Act, 1961 - Business Expenditure - Allowability of EXPENDITURE TO PROTECT BUSINESS Where assessee was an excise contractor for three taluks and in returns filed by him, certain expenditure was claimed as deduction stating that said amount was spent by assessee for purpose of conducting a raid to detect illegal manufacture and sale of illicit liquor by unauthorized persons, with help of Police and Excise Department, assessee should first produce documents to show that expenditure was really incurred and, therefore, matter was to be remanded [Block period 1-4-1987 to 24-9-1997] [Remanded] CIT v. Valerian Pinto [2009] 316 ITR 389 (Kar.) Where the assessee was an excise contractor for three taluks and in the returns filed by him, certain expenditure was shown stating that the said amount was spent by the assessee for the purpose of conducting a raid to detect the illegal manufacture and sale of illicit liquor by the unauthorized persons, with the help of the Police and Excise Department and the Assessing Officer disallowed the claim of the assessee on the ground that such expenditure amounted to bribe : Held that in order to show that the expenditure was incurred by the assessee to facilitate the Police and Excise Department to conduct a raid, no document was produced before the Assessing Officer. It had to be examined whether so much amount was required for conducting the raid. Since such material was not placed before the Assessing Officer, an opportunity should be given to the assessee to produce those documents. Thereafter, it was for the Assessing Officer to examine the claim of the assessee in the light of the passed by this Court in CIT v. A. Janardhana Shetty [2002] 254 ITR 281. M. V. Seshachala for the Appellant. Ennar Assocts for the Respondent. JUDGMENT K.L. Manjunath, J.- This appeal is by the Revenue challenging the order passed by the Income-tax Appellate Tribunal, Bangalore Bench, in I.T.A. No. 48/Bang/03, dated April 8, 2004. 2. Though several questions are raised by the appellant in the appeal memo during the course of arguments, it is brought to our notice that the question of law framed in the appeal memo required…

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