Case Law Details
ACIT Vs Indian Farm Forestry Development Cooperative Ltd. (ITAT Delhi)
ITAT Delhi held that expense on Social & Rural Development Programme are revenue in nature, accordingly, the same are allowable under section 37 of the Income Tax Act.
Facts- The Assessee being Cooperative Society is engaged in trading/marketing of various types of fertilizer, manufactured by IFFCO at various places in India.
AO from the Profit & Loss account submitted by the Assessee, noted that the Assessee has claimed expenses to the tune of Rs. 6,28, 66,118/- under the head expenses on “Social and Rural Development Programme”, which the Assessee was claiming under the head Project Development in earlier years. Therefore, the Assessee was asked to explain social & Rural Development Programmers (Project Development) and to file the necessary evidence in support of these expenses being claimed as Revenue Expenses in nature in the return.
The Assessee filed its reply dated 13.12.2016, which was not found accepted by AO, who by perusing the provisions of section 37(1) of the Act held that project expenses of 6,28,66,118/- doesn’t fulfill the condition of Section 37(1) and cannot be treated as revenue expenditure.
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