Karnataka High Court
Principal Commissioner Of Income ... vs M/S Mysore Minerals Ltd on 27 January, 2022
Bench: Alok Aradhe, M.G.S. Kamal
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 27TH DAY OF JANUARY 2022
PRESENT
THE HON'BLE MR. JUSTICE ALOK ARADHE
AND
THE HON'BLE MR. JUSTICE M.G.S. KAMAL
I.T.A. NO.589 OF 2019
BETWEEN:
PRINCIPAL COMMISSIONER OF INCOME TAX-3
BMTC COMPLEX, KORAMANGALA
BENGALURU-560034.
.... APPELLANT
(BY MR. E.I. SANMATHI, ADVOCATE)
AND:
M/S. MYSORE MINERALS LTD.,
NO.39, M.G. ROAD
BENGALURU-560001
PAN:AACCM 2873L.
... RESPONDENT
(BY MR. V. CHANDRASHEKAR, ADVOCATE)
---
THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX
ACT 1961, ARISING OUT OF ORDER DATED 25.01.2019 PASSED
IN ITA NO.464/BANG/2014 FOR THE ASSESSMENT YEAR 2009-10,
PRAYING TO:
(i) DECIDE THE FOREGOING QUESTION OF LAW AND/OR
SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY
THE HON'BLE COURT AS DEEMED FIT.
(ii) SET ASIDE THE APPELLATE ORDER DATED 25.01.2019
PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH,
BENGALURU, IN APPEAL PROCEEDINGS IN ITA
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NO.464/BANG/2014 (ANNEXURE-A) FOR THE ASSESSMENT YEAR
2009-10 AS SOUGHT FOR IN THIS APPEAL; AND TO GRANT SUCH
OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.
THIS I.T.A. COMING ON FOR HEARING, THIS DAY,
ALOK ARADHE J., DELIVERED THE FOLLOWING:
JUDGMENT
This appeal under Section 260-A of the Income Tax Act
has been filed the revenue against the order dated
25.01.2019 passed by the Income Tax Appellate Tribunal The
subject matter of the appeal pertains to Assessment Year
2009-10. The appeal was admitted on following substantial
questions of law:
(i) Whether on the facts and circumstances of
the case and in law, the Tribunal is justified in
treating the donation given to Bellary DC for
construction of ring road is an allowable
expenditure under Section 37 of the Act?
(ii) Whether on the facts and circumstances of
the case and in law, the Tribunal is right in law in
allowing the expenditure under Section 37 though
the basic conditions of Section 37(b) expenses is
of revenue nature and 37(c) expenses have been
expended wholly and exclusively for the purpose of
the business are not fulfilled?
2. Facts giving rise to filing of this appeal briefly stated
are that the assessee is a company engaged in the business
of extraction of minerals such as bauxite and limestone etc.
The assessee filed the return of income for the Assessment
year 2009-10. The Assessing Officer passed an order of
assessment on 30.12.2011. The aforesaid order was set
aside by the Commissioner of Income Tax by an order dated
29.01.2014 passed under Section 263 of the Act. The
assessee filed an appeal before the tribunal. The tribunal by
an order dated 25.01.2019 has partly allowed the appeal.
3. We have heard learned counsel for the parties at
length. The substantial questions of law involved in this
appeal have already been answered in favour of the assessee
by Supreme Court in 'SRI.VENKATA SATYANARAYANA
RICE MILL CONTRACTORS CO. VS. COMMISSIONER OF
INCOME TAX', 137 ITR 267. Para 10 of the judgment
reads as under:
From the aforesaid discussion it follows
that any contribution made by an assessee to a
public welfare fund which is directly connected
or related with the carrying on of the assessee's
business or which results in the benefit to the
assessee's business has to be regarded as an
allowable deduction u/s 37(1) of the Act. Such a
donation, whether voluntary or at the instance
of the authorities concerned, when made to a
Chief Minister's Drought Relief Fund or a District
Welfare Fund established by the District
Collector or any other Fund for the benefit of the
public and with a view to secure benefit to the
assessee's business, cannot be regarded as
payment opposed to public policy. It is not as if
the payment in the present case had been made
as an illegal gratification. There is no law which
prohibits the making of such a donation. The
mere fact that making of a donation for
charitable or public cause or in public interest
results in the government giving patronage or
benefit can be no ground to deny the assessee a
deduction of that amount u/s 37(1) of the Act
when such payment had been made for the
purpose of assessee's business.
The aforesaid decision of the Supreme Court was
followed by this court vide judgment dated 17.03.2021
passed in ITA NO.460/2017 (P.R. COMMISSIONER OF
INCOME TAX-4 AND ANOTHER VS. KARNATAKA STATE
INDUSTRIAL INFRASTRUCTURE DEVELOPMENT
CORPORATION LTD.) and other connected matters. In view
of decision of the Supreme Court in SRI.VENKATA
SATYANARAYANA RICE MILL CONTRACTORS CO. as well as a
division bench of this court in the judgment dated
17.03.2021 passed in ITA NO.460/2017, the substantial
questions of law are answered against the revenue and in
favour of the assessee.
In the result, the appeal fails and is hereby dismissed.
Sd/-
JUDGE
Sd/-
JUDGE
ss
