1980 (10) TMI 87

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... llege for the construction of a new building, as labour welfare expense. The ITO disallowed the same by treating it as a kind of donation. Before the AAC it was explained on behalf of the assessee that this college is a subsidised educational institution being run by the management for the welfare of the children of the employees of the company. The AAC accepted the said contention and held the assessee to be entitled to the deduction claimed, under s. 37 of the Act. 3. In further appeal before us Shri B.K. Srivastava ld. Deptl. Rep. strongly argued that the deduction was wrongly allowed by the AAC. He contended that since a new building was constructed it was a capital expenditure which was claimed before the AAC as staff welfare expens .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... r urgent, construction of 4 rooms in the college. Thereafter he pointed out another letter dt. 4th Sept., 1974 of the principal of the College to the Managing Director of the assessee giving the details of the expenditure in connection with the construction of 4 rooms and thanking him for the construction. He referred to the letter dt. 23rd July, 1977 of the assessee to the ITO in which it was explained that a new building had been constructed during the assessment year in question at its cost and supervision under Labour Welfare activities. It was also clarified in that letter that the expenses incurred were not donation. Referring to the copy of the Journal Voucher No. 238 dt. 13th Sept., 1974 he showed that the assessee has not made any .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... persons other than the employees of the assessee can also receive education, would not detract from the nature of the activity which is mainly and substantially of a labour welfare type. So far as the decision of the Hon'ble Allahabad High court in the case of Saru Smelting and Refining Corporation Pvt. Ltd. is concerned, it would not avail the Revenue for reason that it has not been the case of the assessee that the expenditure in question led to an enhancement of the goodwill of the company or that it was business expenditure deductible under s. 80G. The assessee has claimed deduction of the expenditure in question as a part of the Labour Welfare Expenses. In terms of the dictum of the Supreme Court in CIT v. Malayalam plantations Ltd. (1 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X