INCOME TAX ACT, 1961

Section 37(1)

Business expenditure - Allowability - Expenditure incurred towards welfare of members of cooperative bank -

Assessee-cooperative bank claimed deduction under the head 'Members Welfare Fund'. AO contended that the expenditure was nothing, but an ad hoc estimated appropriation towards the welfare of members, who were none other than the owners of bank. Further, he contended that such expenses were incurred exclusively for the benefit of members. Hence, the same could not be treated as business expenditure under section 37. Held: Since the disputed expenditure was exclusively incurred towards welfare of members of cooperative bank, therefore, it would be treated as business expenditure and allowed as deduction under section 37(1).

Relied:Karjan Co-operative Cotton Sales Ginning & Pressing Society v. CIT (1993) 199 ITR 17 (Guj) : 1993 TaxPub(DT) 0477 (Guj-HC)

REFERRED : CIT v. Dascroi Taluka Co-operative Purchase & Sales Union Ltd. (1980) 126 ITR 413 (Guj) : 1980 TaxPub(DT) 1129 (Guj-HC),Asstt. CIT v. Prime Co-operative Bank Ltd. [ITA No. 292/SRT/2017, dt. 8-1-2019],Surat National Co-op. Bank Ltd. v. ACIT [ITA No.3242/Ahd/2010(AY: 2007-08), dt. 23-8-2013]

FAVOUR : In assessee's favour

A.Y. : 2013-14

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