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Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1963-64 - Whether where assessee donated certain sum to political party but had not been able to establish any link between donation and its business, amount donated was not a permissible deduction under section 37(1) - Held, yes FACTS The assessee-company claimed deduction under section 37(1) in respect of a donation made to a political party. The ITO did not allow the deduction. Both the AAC and the Tribunal upheld the disallowance. On reference : HELD In the instant case, the assessee had not been able to establish any link between the donation to the political party and its business. Therefore, the amount paid was not a permissible deduction under section 37(1). Note: The case was decided against the assessee. CASE REVIEW Delhi Cloth and General Mills Co. Ltd. v. CIT [1980] 125 ITR 96 (Delhi)followed and relied upon. CASES REFERRED TO Delhi Cloth & General Mills Co. Ltd. v . CIT [1980] 125 ITR 96 (Delhi) and Orissa Cement Ltd. v.CIT [1969] 73 ITR 14 (Delhi). Ravinder Narain for the Applicant. G.C. Lalwani for the Respondent. JUDGMENT Charanjit Talwar, J.-At the instance of the assessee, the following question has been referred by the Income-tax Appellate Tribunal for our opinion : "Whether, on the facts and circumstances of the case, the sum of Rs. 3,15,000 paid to Indian National Congress is a permissible deduction under section 37(1) of the Income-tax Act, 1961 ?" The assessee is a limited company carrying on business in textiles and chemicals, etc. The assessment year in question is the year 1963-64. During this year, the company paid Rs.3,15,000 to the Indian National Congress and claimed this amount as permissible deduction under section 37(1) of the Act. Its case was that the donation was incurred wholly and exclusively for the purpose of its business. The…

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