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TMI Blog1998 (9) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... tment fund 1,55,278 (f) Education fund 15,916 It is the common contention of both the sides that the issues involved in the above ground stand covered in favour of the assessee and against the Revenue by the decision of the Special Bench of the Tribunal in the case of Shri Chhatrapati SSK Ltd. vs. Dy. CIT (1992) 43 TTJ (Pune)(SB) 90 : (1992) 198 ITR 78 (AT) (Pune)(SB). Following the aforesaid order of the Special Bench, we delete the additions. The assessee succeeds on this ground. 3. The next grievance of the assessee is that the authorities below are not justified in disallowing a sum of Rs. 1,01,546 on account of guest-house expenses. At the time of hearing, this ground was not pressed. The same is accordingly dismissed. 4. The nex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered the contentions of the appellant. The appellant has not been able to say as to how these expenses are incidental to the activity of the appellant. The fact that the same were incurred under the Govt. orders or resulted into and indirect benefit to the appellant does not by itself justify that the expenditure was incurred exclusively and necessarily for business purposes or was incidental to carrying on the business activity. The AO was, therefore, justified in disallowing the aforesaid amounts. The disallowance is maintained." 9. S.N. Doshi, the learned counsel for the assessee, submitted that these expenses were incurred as per the directions issued by the State Government through District Collector, Tahsildar, etc. from time to tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mply clear that these directions are statutory directions and, therefore, in compliance of such directions any expenditure incurred by the society has to be held as part of the business expenditure of the society. These being the statutory directions which have to be complied with or else existence of the society itself is at stake and, therefore, if the society has to remain in existence and in business, it has no alternative but to obey and comply these statutory directions regardless of the fact whether such expenditure has nexus to the nature of business carried on by the society. In support of his contentions, he relied upon the judgment of the Madhya Pradesh High Court in CIT vs. M.P. State Handloom Weavers' Co-op. Society (1998) 145 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the area in which the society operates and accordingly the Collector of the District directed the assessee to provide relief to the farmers who contribute sugarcane to the factory of the assessee. Similarly, when there was shortage of fodder in the area, the assessee was directed to arrange cattle camps and under the directions of the Government, the assessee had to incur an expenditure of Rs. 1,99,393 on such cattle camps. The relief was provided to the cattle of the farmers who produce sugarcane for the assessee society by ploughing the land with the help of such cattles. Similarly, a sum of Rs. 42,710 was spent on artificial insemination of such cattle which had direct nexus with the business of the assessee-society. Similar is the pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure being in the nature of statutory obligations and hence such contribution is directly related to carrying on of the business. 12. Coming to the cases relied upon by the learned Departmental Representative, we must submit that the facts of those two cases are distinguishable from the facts of the case before us. In the case of Navsari Cotton & Silk Mills Ltd., the Hon'ble Gujarat High Court held that contribution made to municipality for providing underground pipeline through municipal land for disposal of effluents is allowable business expenditure. In fact, this judgment goes in favour of the assessee. The Hon'ble High Court has laid some positive tests and some negative tests and one of the negative tests is that if the expenditure ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses are in the nature of providing tea and snacks to customers and employees. Since some of the expenditure is also incurred on the employees, we direct the AO to allow 25 per cent of such expenditure as business expenditure. 16. The next grievance of the assessee is that the authorities below is not justified in disallowing a sum of Rs. 13,660 on account of annual general meeting expenses. The AO has disallowed the claim of the assessee on the ground that these expenses were in the nature of entertainment expenses. Since some part of the expenses pertains to the employees, we direct the AO to allow 25 per cent of such expenses as business expenses. 17. The next grievance of the assessee is that the lower authorities are not justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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