S. 37 Expenses on gifts distributed among members & staff in the course of business is allowable

The stand of the revenue that expenditure incurred by the society on giving presents to as own members would amount to expenditure on itself or application of its income to its members also could not be countenanced as the society was entirely a separate entity functioning under the provisions of the Gujarat Co-operative Societies Act, 1961 and was distinct from its members.

As per section 96 of the said Act, disputes can be contemplated even between the society, on the one hand, and its members, on the other. Thus, a society is a separate legal entity having its own business and business income. In the course of augmenting its business and maintaining it, if the society as a corporate body decided to give presents to its members and to commemorate Silver Jubilee Celebrations, it could not be said that the society was not doing something as a prudent businessman.

Consequently, the aforesaid expenditure was allowable business expenditure under section 37.

INCOME TAX APPELLATE TRIBUNAL
AT AHMEDABAD “A” BENCH

Before: Shri D.K. Tyagi Judicial Member and
Shri A.K. Garodia Accountant Member

ITA Nos. 1899/Ahd/2012 A.Y. : -2009-10

ACIT Vs. The Gujrat State Co-op Bank Ltd.

Date of hearing  : 29-01-20 13

Date of pronouncement : 31-01-2013

ORDERPER : D.K TYAGI, JUDICIAL MEMBER:-