M.K. Chaturvedi, Vice President: This appeal by assessee is directed against order of learned CIT(A)-XIII, Chennai and relates to asst. yr. 1996-97. first issue relates to tax treatment of incentive received by assessee from underwriter on purchase of TNPL shares. We have heard rival submissions in light of materials placed before us and precedents relied upon. Para 14 of Sch. 24 on p. 36 of Notes annexed to and forming part of balance sheet and P&L a/c is reproduced here as under: "During year, company subscribed to public issue of M/s TNPL and was allowed 7,00,000 equity shares. company has received brokerage amounting to Rs. 11,55,000 for subscribing to these shares which has been adjusted to cost. Out of 7,00,000 shares, company sold 2,00,000 shares and earned net profit of Rs. 25,47,500. Government of Tamil Nadu s permission for investment as well as sale of shares are awaited. On 25th Jan., 1996, company received first call of Rs. 40 per share payable before 15th April, 1996. No provision has been considered for same since company has got time upto 15th April, 1996 for payment of call money." It transpires from perusal of aforesaid para that assessee, State Government undertaking subscribed public issue of TNPL through underwriter and broker. said underwriter and broker shared brokerage received on account of subscription of shares and parted sum of Rs. 11,55,000 to assessee. In accounts assessee adjusted this amount towards cost of shares. It was made clear that cost of acquisition was reduced pro tanto. Out of seven lakh shares assessee did sell two lakh shares and capital gains on it was offered for taxation and gain was computed on basis of reduced acquisition cost. remaining five lakh shares were retained by assessee as investment. share of brokerage received by assessee attributable to those shares comes to Rs. 8,25,000. AO treated this as income of assessee. CIT(A) confirmed order of AO on this count. Taxability of amount would depend on nature and character of receipt at initial stage. If amount initially received partakes character of trading receipt, amount would necessarily be exigible to tax as such. However, if amounts are initially not taxable, it cannot be taxed. amount which is not initially received as trading receipt, cannot become trading receipt by influx of time. Whenever there is receipt of amount by assessee, it is not nature of receipt under general law that determines its nature for purposes of IT Act but receipt would have to be considered under provisions of IT Act from commercial point of view. Income-tax is tax on income. But word income is dark cat in bag of income-tax code. There is no exhaustive definition of word income . definition is only enumerative. For present we are concerned whether receipt in question could be construed to be capital receipt or revenue receipt. We have considered entire conspectus of case. receipt bears clear nexus with investment. Income was not earned on investment, but on account of investment. Funds were deployed through particular broker and broker agreed to part with brokerage in consideration of deployment of such funds through him. In way assessee acquired shares at lesser value. cost to assessee was amount paid for shares minus brokerage received in form of incentive. Such incentive cannot be construed to be Revenue receipt. It was adjusted towards cost of shares. It is of capital nature. In CIT vs. U.P. State Industrial Development Corporation (1997) 139 CTR (SC) 267: (1997) 225 ITR 703 (SC), Supreme Court held that in order to determine question of taxability, well-settled legal principles as well as principles of accountancy have to be taken into account. It is well accepted proposition that for purpose of ascertaining profits and gains, ordinary principles of commercial accounting should be applied, as long as they do not conflict with any express provision of relevant statutes. Underwriting commission not taken to P&L a/c but adjusted to reduce cost of shares is not exigible to tax. facts of present case are different. Here assessee is not underwriter. It received part of commission given to under writers. amount of commission was adjusted to reduce cost of shares. This writers. amount of commission was adjusted to reduce cost of shares. This was in accordance with principles of accountancy. As such amount is not exigible to tax. We, therefore, decide this issue in favour of assessee and against Revenue. next issue relates to claim for deduction towards construction of noon-meal centre and school building. learned counsel for assessee for first time placed before us letter dt. 11th Dec., 1991 addressed by Tmt. R. Indirakumari, Social Welfare Minister, Government of Tamil Nadu, Fort St. George, Chennai-9 to Thiru A.N. Dyaneswaran, IAS, managing director of assessee-company. English translation of this letter reads as under: "As TAMIN has come forward to take up Renovation of Nutritious Noon Meals Centres at Chennai, Hon ble Chief Minister of Tamil Nadu has consented to provide all public sector undertakings contribution of 5 per cent of net profit earned by them for this work and accordingly renovation work has been stated in various noon-meal centres throughout State. secretary, Social Welfare Department has contacted you in connection with contribution of Rs. 50,000 as first instalment. same may be issued in favour of Secretary, Social Welfare Department by means of cheque directly. Secretary, Industries Department will convene meeting of all public sector undertakings shortly to raise funds for above work. In meeting he will request every public sector undertaking to contribute not less than 5 per cent of net profit. In meanwhile to carry out renovation work without interruption, I request you to contribute Rs. 10 lakhs as first instalment. I would like to express my thanks to all those who have contributed to renovate all noon-meal centres before Hon ble Chief Minister s birthday on 24th Feb., 1992. Further, Hon ble Chief Minister has ordered to take up question of exemption of this expenditure under IT Act to those who made contribution. I know very well that you have more anxiety and TAMIN is leading in this cause than other public sector undertakings. I also know that you have been interested in welfare of childrens development." learned counsel for assessee invited our attention to decision of apex Court rendered in case of Sri Venkata Satyanarayana Rice Mill Contractors Co. vs. CIT (1997) 137 CTR (SC) 267: (1997) 223 ITR 101 (SC). In this case Hon ble Supreme Court has held that any contribution made by assessee to public welfare fund which is directly connected or related with carrying on of assessee s business of which results in any benefit to assessee s business has to be regarded as allowable deduction under s. 37(1) of Act. It is, therefore, important to see that whether contribution was made towards welfare fund or directly connected or related with carrying on of assessee s business. apex Court further indicated that such contribution must result in benefit to assessee s business. Did assessee earn any extra profit by making such donation or earn any business advantage? This is determining factor as per ratio of Hon ble apex Court in case of CIT vs. Industrial Development Corporation of Orissa Ltd. (2000) 164 CTR (Ori) 316: (2001) 249 ITR 401 (Ori). It was held that donation made by assessee to Chief Minister s Relief Fund was not allowable as business expenditure under s. 37(1) because there was nothing on record to establish that such donation was directly connected with and related to carrying on of business of assessee. It is true as held by Hon ble jurisdictional High Court in case of CIT vs. Madras Refineries Ltd. (2004) 266 ITR 170 (Mad) that concept of business is not static. Madras Refineries Ltd. was found to be polluting industry. It has spent amounts on bringing drinking water to locality and aiding local school. expenditure was incurred to earn goodwill of local community. It was to safeguard interest of business. As such, expenditure was held to be allowable. In case of Trichy Distilleries & Chemicals Ltd. vs. ITO (1990) 36 TTJ (Mad) 620: (1990) 33 ITD 249 (Mad), expenditure was incurred out of commercial consideration. assessee was carrying on business in industrial alcohol. It had to depend upon Government for supply of its raw materials to its factory. To gain favour of officials assessee incurred expenditure. In present case assessee is State Government undertaking. It is not expected that to gain favour of officials, expenses are required to be made. There is absolutely nothing on record to indicate that assessee did acquire any business advantage out of such expenses. It transpires from perusal of letters submitted that assessee was required to contribute to renovate noon-meal centres before Chief Minister s birthday, besides Hon ble Chief Minister had ordered to take up question of exemption of this expenditure under IT Act to those who made contribution. There is absolutely no business nexus with these expenses. As such, it cannot be allowed under s. 37(1). next issue relates to allowability of expenditure incurred towards contribution to Tamil Nadu Basket Ball Association in connection with SAF Games. Here also assessee failed to explain fact how it gained some business advantage by making this expenditure. Following reasoning given in aforesaid para, we uphold impugned order on this count also. last issue relates to claim for deduction under s. 80HHC of Act. assessee did not make claim in return. It was urged that in view of CBDT Circular No. 14 of 1955, dt. 11th April, 1955, it was duty of AO to allow claim even if it was not made in return. Nothing was placed before us to show that assessee did fulfil all required conditions for availing benefit of s. 80HHC. benefit is available subject to fulfilment of conditions stipulated in statute. AO is not expected to tax case on touchstone of s. 80HHC unless required details are available. As such we find no infirmity in impugned order on this count. We uphold same. In result, appeal of assessee stands partly allowed. *** TAMIL NADU MINERALS LTD. v. JOINT COMMISSIONER OF INCOME TAX