On appeal, the Tribunal held that ,the assessee received grants from the Ministry of Science and Technology. The grants were to be used in accordance with the directions issued by the Ministry.\u00a0 In the preceding AY, the Assessing Officer had accepted Assessee\u2019s claim without any objection.\u00a0 Hence, when the same policy had been followed by the assessee and accepted by the Assessing Officer, he should not have taken a different stand in the year under review. \u00a0Further, the assessee had made it very clear that salary was paid to all old employees who had worked for the assessee and the expenses were genuine.\u00a0 Tax had been deducted on the salary and paid to the Government. All the employees had worked for the assessee.\u00a0 No case was made out by the Assessing Officer that making salary payment was an offence or something prohibited by law.\u00a0 Therefore, Explanation 1 to S.37\u00a0of the\u00a0Act, would not be attracted in the present case. (AY.2011-12, 2012-13)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 37(1) : Business expenditure \u2014 Expenses prohibited by law \u2014 Grants \u2014 Assessee receiving grants on annual basis and grants used in accordance with directions of Government \u2014 AO allowing salary expenses in preceding year \u2014 AO should not have taken a different stand in current year \u2014 Salary paid to all old employees who worked for Assessee and expenses genuine \u2014 Expenses wholly and exclusively for purpose of business, hence expenses are deductible. <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-12523","post","type-post","status-publish","format-standard","hentry","category-digest"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-3fZ","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/12523","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=12523"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/12523\/revisions"}],"predecessor-version":[{"id":12524,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/12523\/revisions\/12524"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=12523"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=12523"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=12523"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}