Donation made to mosque claimed as Business Expense disallowed by ITAT

Donation made to mosque claimed as Business Expense disallowed by ITAT The Appellant paid Rs. 1,00,000/- to the mosque for providing free lunch to his karagirs. His contention was that these expenses were incurred exclusively for staff welfare and are allowable as business expenses u/s 37(1) of the Act. The same was disallowed by Assessing Officer and CIT(A). Aggrieved by the additions, he is in the Appeal with the Tribunal.

Donations cannot take the character of Business Expense

It was submitted by the Department that the mosque has provided free lunch to the employees of the assessee along with other persons of that area and therefore, it could not be said that Rs.1,00,000/- paid by the assessee was for the free lunch provided by the mosque to the employees of the assessee. He submitted that no bill has been raised by the mosque on the assessee and it was the assessee who has voluntarily paid a donation to the mosque and which can only be considered u/s 80G of the Act and not in terms of section 37(1) of the Act.

ITAT Order

It is evident from the letter of mosque produced by the assessee that the free lunch used to be provided by the mosque laborers/artisan etc. in that area. The facility of the assessee happened to be in the vicinity of the mosque so those employees were availing free lunch provided irrespective of whether they were employed in the facility of the assessee or not. By way of making payment of Rs.1,00,000/- by the assessee to the mosque, it could not be established that the payment was a quid pro quo for the free lunch facility extended to the laborers/Karagirs of the assessee. The mosque was not under the control of the assessee and free lunch was provided to the other persons and not exclusively to the laborers of the assessee. Therefore, in such circumstances, it could not be treated that the payment made by the assessee was wholly and exclusively for the purpose of the business of the assessee and accordingly the action of the Ld. CIT(A) in disallowing the ground is upheld. To Read Judgment Download PDF Given Below: