PRINCIPAL COMMISSIONER OF INCOME TAX-3 vs. M/S MYSORE MINERALS LTD

1 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

2 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

3 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

4 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

5 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