Law: Income Tax Act, 1961

Section: 37

Income-tax---Business expenditure---Expenditure incurred for purposes of business---Contribution to Panchayat for upgrading school ---Asssurance by school management that children of assessees employees would be given preference in admission to school---Amount spent for benefit of employees---Expenditure was deductible---Indian Income Tax Act, 1961, S.37. The assessee-company made a contribution of Rs.35,000 to the Panchayat where its factory was situated. It made the said expenditure for upgrading the elementary school of the Panchayat as High School. The assessee claimed the contribution made to the Panchayat as a revenue expenditure. The Income-tax Officer rejected the claim. The finding of the Tribunal was that by making the contribution to the Panchayat for upgrading the elementary school, the assessee-company was assured by the school management that it would give preference in the matter of admission to the children of the employees of the assessee-company in the said school. It held that the expenditure was deductible. On a reference: Held, that the employees of the assessee were given the satisfaction by the donation made by the assessee that their employers had taken care of the education of their wards and such a mental satisfaction on the part of the employees would generate goodwill and expenditure could be regarded as staff welfare expenditure and allowable as business expenditure. The fact that the benefit had percolated to the general public would not stand in the way of the assessee getting the necessary deduction once the expenditure was held to be business expenditure. CIT v. Cheran Transport Corporation Ltd. (1996) 219 ITR 203. (Mad.) and Sri Venkata Satyanarayana Rice Mill Contractors Co. v. CIT (1997) 223 ITR 101 (SC) ref. JUDGMENT N. V. BALASUBRAMANIAN, J.---Pursuant to the direction of this Court, the Appellate Tribunal has stated a case and referred the following question of law for the opinion of this Court under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"): "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the sum of Rs.35,000 being the…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492