Case Law Details
Brief– By donating the amount, the firm had been able to attract good Articled Clerks and other professional persons who are the backbone of any professional practice. Thus there was a good professional reason for the firm to contribute to the building fund of the Branch of the ICAI. The said payment satisfies the commercial expediency test as the contribution had a direct nexus with the carrying on of the profession by the firm. Further, if the claim was allowable under section 37(1) itself there was no case for proceeding to section 80G which applies to all assessee’s whether or not they carrying on business or profession.
Facts of the Case
Facts in brief are that the assessee is a firm of Chartered Accountants established in the year 1955. During the year, firm paid a sum of Rs. 20,00,000 to Pune Branch of Western India Regional Council of The Institute of Chartered Accountants of India as contribution towards construction of a building for the Pune Branch of the Council. The payment was made vide Cheque No. 991364, dt. 27-3-2009. The Firm had claimed the aforesaid payment as an expenditure incurred wholly and exclusively for the purposes of the profession and not as a donation deductible under section 80G.
The learned assessing officer has taken a view that it is in the nature of a donation; provisions of section 80G are specific and will override those of section 37(1) which are general in nature. He further held that the assessee has not proved that donation was made wholly and exclusively for the purpose of the firm.
By the impugned order Commissioner (Appeals) confirmed the action of the assessing officer against which assessee is in further appeal before us.
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