By K. B. Bhujle
Advocate
15 Principal CIT vs. South Canara District Central Co-Operative Bank Ltd. [2022] 442 ITR 338 (Kar.) A.Y.: 2012-13 Date of order: 14th December, 2021 S. 37 of ITA, 1961
Business expenditure — Meaning of expression “wholly and exclusively” in s. 37 — No compelling reason for incurring particular expenditure — Expenditure benefitting third person — Finding by Tribunal that expenditure had been incurred for purposes of business — Expenditure deductibleFor the A.Y. 2012-13, the assessee incurred an expenditure made towards Navodaya Grama Vikasa Charitable Trust with a description “animator salary” under the directions of their controlling authority, i.e., NABARD. The Assessing Officer disallowed the expenditure.
On extensive analysis of the factual aspects, the Tribunal concluded that though the assessee was promoting the formation of self-help groups in the districts of Dakshina Kannada and Udupi, loans were given to such self-help groups for home industries like candle-making, soap-making and similar other activities, and the income generated by such self-help groups came back to the assessee as deposits. The commercial exigency being established u/s 37(1), the expenditure was allowed as deduction.
On appeal by the Revenue, the Karnataka High Court upheld the decision of the Tribunal and held as under:
“i) In Sasoon J. David And Co. P. Ltd. vs. CIT [1979] 118 ITR 261 (SC) it had been obse
