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TMI Blog2008 (8) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure of Rs. 24 lakhs as revenue expenditure which was incurred towards construction of hockey stadium. The AO has not given any particular reason for making addition. However, later on, it transpired that addition was made in view of the directions issued by Addl. CIT, Virudhunagar Range, under s. 144A of the IT Act. Before the Addl. CIT, the main reason given for incurring this expenditure on construction of hockey stadium was that the assessee would earn goodwill of the Collector and influence to get more contracts and, therefore, the same was for the purpose of business. The Addl. CIT had noted that there was no condition for constructing the hockey stadium before allotment of contract and, therefore, the claim for expenditure was dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest resulting in Government giving patronage or benefit was incurred voluntarily or at the instance of authorities and hence held to be allowable. He also relied on the decision of the Hon'ble Madras High Court in the case of Cholan Roadways Corporation Ltd. vs. CIT (1999) 235 ITR 473 (Mad), wherein the contribution made towards flag day fund and Chief Minister's Rehabilitation Fund were deductible. He also submitted that the hockey stadium was constructed on the Government land for the purpose of public and it was being run by local administration and the assessee had nothing to do with it after construction. Therefore, this expenditure cannot be called as capital expenditure because the asset does not belong to the assessee. 5. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... welfare and it will create lot of goodwill for the business of the assessee. At the same time, this cannot be called to be against any public policy because, this kind of measure helps in the growth of the society. 7. The Hon'ble Supreme Court in the case of Sri Venkata Satyanarayna Rice Mill Contractors Co. vs. CIT was concerned with an assessee who was an exporter of rice from the State. Rice could not be exported without a permit from the District Collector. The permission is being given only if some donation was made to the Andhra Pradesh Welfare Fund, West Godavari. The AO disallowed the contribution to this fund and on appeal this was allowed by the Tribunal. However, on a reference to the High Court, though it was held that the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent is made for the purposes of the business, and the payment made is not by way of penalty for infraction of any law, the same would be allowable as a deduction." 8. Similarly, the Hon'ble Madras High Court in the case of Cholan Roadways Corporation Ltd. vs. CIT, has held that contributions towards flag day fund and rehabilitation fund of Chief Minister are allowable business expenditure because they are not in contravention of any law. Again, the Hon'ble Madras High Court in the case of Madras Refineries Ltd., where some expenditure was incurred by the assessee company for gaining goodwill of the people living in and around its industries by providing fund for establishing drinking water facility, the expenditure was held to be allowabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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