2018 (6) TMI 602 - AT - Income Tax

Allowable expense u/s 37(1) - Disallowance of contribution to Energy Conservation Fund - Held that - Following the decision of this Tribunal in assessee s own case 2018 (6) TMI 538 - ITAT JAIPUR as held disallowance on account of contribution to energy conservation fund made by the Assessing Officer is directed to be deleted as held contribution to the fund set up for products which was also the business of the assessee has direct nexus to the advancement of the assessee business - Decided in favour of assessee

Summary

Issues:
1. Disallowance of contribution to Energy Conservation Fund under section 37(1) of the Income Tax Act, 1961.

Analysis:
The appeal filed by the Revenue challenged the order of the ld. CIT (A) regarding the disallowance of the contribution made by the assessee to the Energy Conservation Fund. The AO disallowed the contribution, stating it was not an expenditure wholly and exclusively for the business but an application of income. However, the ld. CIT(A) allowed the claim, relying on a previous Tribunal decision for the assessment year 2008-09. The Tribunal noted that this issue had been consistently dealt with in the assessee's own case for various assessment years. In a previous order for the assessment year 2014-15, the Tribunal had decided in favor of the assessee, following similar decisions for the assessment years 2008-09 and 2012-13.

The Tribunal reiterated that the contribution made by the assessee to the Energy Conservation Fund was allowable as a deduction. It noted that the contribution was made to the Rajasthan State Energy Conservation Fund, constituted as per the Energy Conservation Act, 2001. The Tribunal highlighted that contributions to statutory funds are generally allowable as deductions. Citing relevant case law, the Tribunal emphasized that the contribution had a direct nexus to the advancement of the assessee's business, as the company was incorporated to promote non-conventional and renewable energy sources. The Tribunal upheld the decision of the ld. CIT(A) to delete the disallowance, following the precedent set in previous cases.

In conclusion, the Tribunal dismissed the appeal of the Revenue, affirming the findings of the ld. CIT(A) regarding the disallowance of the contribution to the Energy Conservation Fund. The Tribunal stated that based on previous decisions in the assessee's own case and the absence of any contrary binding precedent, there was no error or illegality in the ld. CIT(A)'s order concerning this issue. The decision was pronounced in open court on 07/06/2018.