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Issues:
1. Disallowance of contribution for stadium construction as deduction. 2. Nexus between expenditure and business activities. 3. Nature of expenditure - revenue or capital. Analysis: 1. The appeal was against disallowance of Rs. 5 lakhs contribution made by the assessee-company for stadium construction. The Commissioner (Appeals) upheld the disallowance, stating the stadium was not solely for the company's benefit. The tribunal considered the purpose of the stadium construction and its impact on the community. It was argued that the contribution was made for commercial expediency and to maintain a good relationship with the Orissa government. 2. The assessee contended that the expenditure was incurred for business expediency, even if not directly related to immediate profits. The tribunal analyzed the principles of commercial expediency and the indirect benefits to the business. It was emphasized that the expenditure need not be directly linked to income generation but should facilitate business operations. The tribunal referred to relevant case laws to support the argument that commercial expediency justifies certain expenses. 3. The tribunal deliberated on the nature of the expenditure, whether revenue or capital. It was noted that the stadium, although not owned by the assessee, provided an enduring benefit to the employees and the community. Comparisons were drawn with cases where expenditure led to enduring benefits, resulting in capital nature classification. The tribunal cited precedents where similar contributions were deemed capital expenditure. Consequently, the tribunal upheld the disallowance of the deduction, considering the enduring nature of the benefit derived from the stadium construction. In conclusion, the tribunal dismissed the appeal, affirming the decision of the Commissioner (Appeals) to disallow the deduction of Rs. 5 lakhs as revenue expenditure due to the capital nature of the expenditure and the enduring benefits derived from the stadium construction.
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