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