Where assessee incurred expenditure on
installation of traffic signals at various parts of city in order to secure
free movement of its employees so that they reached office in time, amount so
spent being a part of its corporate responsibility, was to be allowed as
business expenditure under section 37(1)
Facts
·
The assessee paid certain amount
for installation of traffic signals in a particular part of the city.
·
The assessee claimed that the
traffic signals had been installed to ensure that employees would reach office
in time without facing any traffic problems and, hence, it should be allowed as
revenue expenditure.
·
The Assessing Officer held that
benefit from installation of traffic signals derived by assessee being very
remote, the expenditure could not be allowed under section 37(1).
·
The Tribunal, however, allowed the
assessee's claim.
·
On revenue's appeal:
Held
Expenditure incurred by the assessee was allowed by the
High Court in the light of the following grounds:-
1)
Payment made by aseessee
couldn’t be considered as illegal as it wasn’t paid to the police or rowdies to
keep them away from the business premises.
2)
Payment made by assessee couldn’t be
disallowed on the ground that expenditure was incurred voluntary and without
any necessity and pubic was also benefited from such expense.
3)
To allow an expense the term ‘for the
purpose of business’ shouldn’t be limited to meaning of earning the profits
only.
4)
Expense incurred by
assessee had to be allowed because late coming of employee due to severe
traffic congestion was seriously affecting the business of the assessee.
5)
Expense couldn’t be
disallowed on the ground that it was the responsibility of the State and in
particular, the police department either to install the traffic signal or
control the traffic because it was also the corporate Social responsibility of
the assessee.
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