Baroda v. M/S. Gujarat Narmada Valley Fertilizers Co. Ltd.....opponent(S

O/TAXAP/1332/2006 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1332 of 2006 With TAX APPEAL NO. 1333 of 2006 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ?the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ DY.COMMISSIONER OF INCOME-TAX,(ASSTT)SR-1, BARODA....Appellant(s) Versus M/S. GUJARAT NARMADA VALLEY FERTILIZERS CO. LTD.....Opponent(s) ================================================================ Appearance: MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERIandHONOURABLE MR.JUSTICE K.J.THAKERDate : 01/12/2014ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1.By way of these appeals, the appellant- revenue has challenged the common order dated 06.03.2006 passed by the Income Tax Appellate Tribunal [for short “the Tribunal] in ITA No.1131/Ahd/1998 and 1132/Ahd/1998, whereby the appeals filed by the revenue were partly allowed by the Tribunal. 2.The facts of both these appeals as well as the question of law are identical, therefore, we are discussing only the facts of Tax Appeal N0.1132 of 2006 for our convenience. 3.The facts in brief are that the assessee filed its return for the Assessment Year 1994-95 on 30.12.1994, declaring nil income after set off of carried forward investment allowance. A revised return is filed on 29.11.1995. Thereafter, the return was processed under Section 143(1)(a) of the Income Tax Act. The Assessing Officer, after scrutiny passed an order under Section 143(3) of the Income Tax Act. Against the said order of the Assessing Officer, the assessee filed an appeal before the commissioner of Income Tax(Appeals), Baroda. The CIT(A) vide order dated 23.03.1998 partly allowed the appeal of the Assessee. 3.1.Being aggrieved and dissatisfied with the order of the CIT(A), the revenue filed an appeal before the Income Tax Appellate Tribunal. The Tribunal vide impugned order dated 06.03.2006 partly allowed the appeals of the revenue. Hence, these appeals are filed at the instance of the revenue. 4.While admitting Tax Appeal No.1332 of 2006, the Court had formulated the following substantial questions of law:- “Whether the Hon'ble ITAT was right in law and on facts in allowing the assessee's claim of contribution of Rs. 1,10,00,000/- for A.Y 1994-95 made to Chief Minister's Earthquake Relief Fund and State Government, as expenditure incurred for the purpose of business allowable u/s 37(1) of the IT Act, 1961?” 4.1.While admitting Tax Appeal No.1333 of 2006, the Court had formulated the following substantial questions of law:- “Whether the Hon'ble ITAT was right in law and on facts in allowing the assessee's claim of contribution of Rs. 22,15,000/- for A.Y 1995-96 made to Chief Minister's Earthquake Relief Fund and State Government, as expenditure incurred for the purpose of business allowable u/s 37(1) of the IT Act, 1961?” “Whether the Hon'ble ITAT was right in law and on facts in allowing the assessee's claim of contribution of Rs. 1,10,00,000/- for A.Y 1994-95 made to Chief Minister's Earthquake Relief Fund and State Government, as expenditure incurred for the purpose of business allowable u/s 37(1) of the IT Act, 1961?” 4.1.While admitting Tax Appeal No.1333 of 2006, the Court had formulated the following substantial questions of law:- “Whether the Hon'ble ITAT was right in law and on facts in allowing the assessee's claim of contribution of Rs. 22,15,000/- for A.Y 1995-96 made to Chief Minister's Earthquake Relief Fund and State Government, as expenditure incurred for the purpose of business allowable u/s 37(1) of the IT Act, 1961?” 5.Learned counsel for the appellant-revenue has submitted that the Tribunal has committed error in passing the impugned order. He further submitted that the Tribunal has not properly appreciated the material on record. He, therefore, urged to allow these appeals. 6.Learned advocate for the respondent has supported the impugned order of the Tribunal and contended that the question of law involved in these appeals is covered by the decision of the Apex Court in the case of Sri Venkata Satyanarayana Rice Mill Contractors Co. v. Commissioner of Income Tax reported in 223 ITR page 101 and the decision of this Court rendered in Tax Appeal No.457 of 1999 on 13.11.2014. 7.We have heard learned advocate for both the parties and perused the material on record as well as the decisions relied upon by the learned advocate for the appellant. The question of law involved in these appeals is already answered by the Apex Court in the case ofSri Venkiata Styanarayan Rice Mill Contractors Co.(supra), wherein it is held that any contribution made by an assessee to a public welfare fund which is directly connected or related to the carrying on the assessee’s business or which results in benefit to the assessee’s business has to be regarded as an allowable deduction under section 37(1) of the Income Tax Act, 1961. Such a donation, whether voluntary or at the instance of the authorities concerned, when made to a Chief Minister’s Drought Relief Fund or a District Welfare fund established by the District Collector or any other fund for the benefit of the public and with a view to secure benefit to the assessee’s business, cannot be regarded as payment opposed to public policy. The mere fact that making of a donation for a charitable or public cause or in public interest results in the Government giving patronage or benefit can be no ground to deny the assessee a deduction of that amount under Section 37(1) of the Act when such payment had been made for the purpose of the assessee’s business. This Court also in Tax Appeal No.1181 of 2014 (supra) has answered the issue involved in these appeals in favour of the assessee and against the revenue. 8.In the present case also the donation was made by the assessee to the Chief Minister's Earthquake Relief Fund, therefore, it has to be regarded as an allowable deduction under section 37(1) of the Income Tax Act, 1961. 9.In view of the above, the question of law posed in these appeals is answered in favour of the assessee and against the revenue. Both these appeals are, accordingly, dismissed. (K.S.JHAVERI, J.) pawan O/TAXAP/1332/2006 JUDGMENT (K.J.THAKER, J)