S. 37(1) : Business expenditure-Community development expenditure-Street lights on the road, ambulance for meeting medical emergencies , developing public garden-The concept of business is not static and over a period of time , it would include within its fold the care and concern for the society at large which would result in a good will being created in its favour leading to better business-Allowable as business expenditure.
The Respondent assessee had claimed deduction under the head community development expenditure for providing street lights on the road, ambulance for meeting medical emergencies , developing public garden for residence of the village where the factory is situated . The Assessing Officer disallowed the expenditure on the ground that the same are not incurred wholly and exclusively for the purpose of Respondents’ business. The CIT(A) up held the order the AO. On appeal Tribunal following the decision in CIT v. Madras Refineries Ltd (2004) 266 ITR 70 (Mad)( HC) allowed the appeal on the ground that the concept of business is not static and over a period of time , it would include within its fold the care and concern for the society at large which would result in a good will being created in its favour leading to better business. Accordingly the expenditure is allowed as allowable business expenditure. On appeal by the Revenue the High Court affirmed the order of the Tribunal. (ITA No. 1686 of 2013 dt. 10-7-2015)(AY. 1996-97)
CIT v. Nicholas Piramil (India) Ltd. (Bom)(HC) www.itatonline.org
[Coram : Hon’ble Shri Justice M. S. Sanklecha & Hon’ble Shri Justice N.M. Jamdar]