Commissioner Of Income Tax-I Chennai v. M/S. Chennai Petroleum Corpn. Ltd. Refinery House, Manali Chennai 600 068

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HON'BLE MR.JUSTICE P.D.DINAKARANAND THE HON'BLE MR.JUSTICE P.P.S.JANARTHANA RAJA Commissioner of Income Tax-IChennai...Appellant Vs. M/s. Chennai Petroleum Corpn. Ltd.Refinery House, ManaliChennai 600 068...Respondent Appeal under Section 260A of the Income Tax Act, 1961against the order of the Income Tax Appellate Tribunal, Madras'A' Bench dated 13.11.2003 in ITA No.22/Mds/1997 for theassessment year 1993-94 against the order of the Commissionerof Income Tax (Appeals) VII, Madras-34 in IT.Appeal No.51/96-97dated 6.9.96 against the order of Deputy Commissioner of IncomeTax Special Range VII, Madras-34 dated 25.3.1996 PAN/GIR.NO.47-003-CX-1137 for the Assessment Year 1993-94. The above tax case appeal is directed against the order ofthe Income-tax Appellate Tribunal in ITA No.22/Mds/1997 dated13.11.2003. 2. The Revenue is the appellant. During the previous yearrelevant to the assessment year 1993-94, the assessee's claimwith respect to social and welfare community expenses wasdisallowed by the assessing officer. Aggrieved by the saidorder, the assessee filed an appeal before the Commissioner ofIncome-tax (Appeals), who allowed the appeal deleting thedisallowance. Against the said order, the revenue preferred anappeal before the Income Tax Appellate Tribunal, whichdismissed the appeal. 3. Aggrieved by the same, the Revenue has preferred thisappeal raising the following substantial question of law:"Whether in the facts and circumstances ofthe case, the Tribunal was right in holdingthat the social and welfare communityexpenses amounting to Rs.15,32,000/- is anallowable as business expenditure undersection 37(1) of the IT Act?" 4. It is fairly submitted by the learned counsel appearingfor the appellant that the issue raised in the question iscovered against the Revenue by the decision of this Court inCOMMISSIONER OF INCOME TAX v. MADRAS REFINERIES LTD. (266 ITR170) and CHERAN ENGINEERING CORPORATION LTD. v. COMMISSIONER OFINCOME-TAX (238 ITR 892). 5. This Court, in COMMISSIONER OF INCOME TAX v. MADRASREFINERIES LTD. (266 ITR 170), held that the expenses incurredto earn goodwill of local community is deductible as businessexpenditure. 6. In CHERAN ENGINEERING CORPORATION LTD. v. COMMISSIONEROF INCOME-TAX (238 ITR 892) also, this Court has held that theamounts transferred to labour welfare fund and paid to workersfor rendering strike free services are labour welfareexpenditure and the said expenses are incurred for the purposeof business and therefore, they are deductible as businessexpenditure. 7. In view of the ratio laid down in the decisions citedsupra, we hold that the social and welfare community expensesare deductible as business expenditure. We are, therefore, of the view that there is no error orillegality in the order of the Tribunal and therefore, nointerference is warranted. Finding no merit to entertain theabove appeal, the same is dismissed. kpl Sd/Asst.Registrar /true copy/ Sub Asst.Registrar To 1.The Assistant Registrar, Income Tax Appellant Tribunal IIIFloor, Rajaji Bhavan, Besant Nagar, Madras-90. 2.The Commissioner of Income Tax (Appeals)VII, Madras-34. 3.The Deputy Commissioner of Income Tax, Special Range VII,Madras-34. 4.The Commissioner of Income Tax I, Chennai. + one cc to Mr.Pushya Sitaraman, Sr.Standing Counsel,I.T.Department, Sr.No.4353. Vs (CO)RSM/27.2.2006 T.C.(A) No.57 of 2006.