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TMI Blog2024 (6) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... ating - capital expenditure or revenue expenditure - HELD THAT:- We find that the CIT(A) had given a finding that the sponsorship expenditure incurred by the assessee is in the nature of revenue expenditure since the same has been incurred in giving award, price, etc. pursuant to the objectives of the assessee and therefore there is a statutory obligation on the part of the assessee to promote solar energy for which the contribution was made and therefore the same would amounts to business expenses and eligible for deduction as revenue expenditure. In support of its finding the CIT(A) also relied on the judgement of the Hon'ble Supreme Court in the case of Lakshmi Ji Sugar Mills Co. Pvt. Ltd. [ 1971 (8) TMI 13 - SUPREME COURT] and the judgement of Raj Spinning and Weaving Mills Ltd [ 2003 (11) TMI 6 - RAJASTHAN HIGH COURT] . Decided in favour of assessee. - Shri Waseem Ahmed, Accountant Member And Shri Soundararajan K. Judicial Member For the Assessee : Shri Ganesh S., Advocate For the Revenue : Shri Vilas V. Shinde, CIT-DR ORDER PER: SOUNDARARAJAN K., J.M. This appeal filed by the Revenue challenges the order dated 29.12.2023 passed by the National Faceless Appeal Centre, De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the grounds that may be urged. 3. The brief facts of the case are that the assessee is a Government of Karnataka undertaking and they are the nodal agency for the government to propagate the non-conventional energy sources, i.e. solar and wind mill energy by setting up/helping to set up wind mills and solar power plants. The respondent assessee commenced its operation of business from 1996. During the course of their activity the assessee had received grants from the government and after spending the grants, the unutilised grants available with them was deposited in the banks by way of fixed deposits and the interest income received from the deposits were credited into the grant account which was not offered to tax as income. Similarly the assessee also contributed a sum of Rs. 5 crores to the corpus fund of the International Solar Alliance to present the Karnataka Visveswaraya SolarAward for the Best Floating Solar Project in ISA Member Countries . The assessee made their contribution as directed by the Government and also because the award is given to achieve the business objects of the assessee. The Government also contributed an equal amount of Rs. 5 crores. Therefore the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismiss the appeal filed by the Revenue. 6. We heard the rival contentions and perused the materials available on record. The learned CIT(A) in his order dated 29.12.2023 had given a detailed finding in respect of the above two issues on which the Revenue has filed this appeal. 7. In respect of the first dispute that the interest income received on the unutilised grants given by the Government of Karnataka, the learned CIT(A) had given its findings as follows: 5.1.3 I have gone through the submissions of the appellant, findings of the AO and judicial precedents on the subject matter. It is noted that this issue is identical in the case of the appellant for AY 2014-15. On further appeal, the CIT(A) decided the issue in favour of the appellant but the revenue went in appeal against the order of Commissioner(Appeals). The ITAT, 'C' Bench, Bengaluru vide order dated 29.05.2020 in ITA No. 1347/Bang/2019 has dismissed the appeal of revenue. Further, the Hon'ble ITAT has decided similar issue in favour of the appellant for A.Y. 2015- 16, 2017-18 and 2018- 19 vide order dated 31.07.2023 in ITA No.387/396/397/Bangalore/2023. Considering that there is no change in the facts, circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... varaya Solar Award . The first issue here is that whether the said expense is for business purpose or not. On perusal of the memorandum and articles of the appellant, it is seen that giving of awards, prizes etc. is one of the ancillary object of the company. Considering the statuary obligation of the appellant and the fact that the main object of the appellant is to promote solar energy, contribution of Rs. 5,00,00,000/- to ISA for sponsoring the award Karnataka Visvesvaraya Solar Award is held to be a business expense. 5.2.6 Since, sponsoring of the said award does not lead to any directly attributable benefit which are likely to accrue in future years and is not leading to any measurable advantage of enduring nature, the claim of the appellant that the contribution of Rs. 5,00,00,000/- to ISA is a revenue expense is acceptable. Accordingly, the disallowance made by the AO of Rs. 5,00,00,000/- treating the same as capital expenditure is deleted. The grounds of appeal raised are allowed. 10. We find that the learned CIT(A) had given a finding that the sponsorship expenditure incurred by the assessee is in the nature of revenue expenditure since the same has been incurred in giving ..... X X X X Extracts X X X X X X X X Extracts X X X X
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