COMMISSIONER OF INCOME TAX AND THE JOINT COMMISSIONER OF INCOME TAX, ASSESSMENT, SPECIAL RANGE-2 Vs. KARNATAKA FINANCIAL CORPORATION

JUDGEMENT

(1.) THE revenue has come up in this appeal challenging the legality and correctness of the order dated 5.2.2004 in ITA. No. 716/BANG/2002, in respect of the assessment year 1998 -99.

(2.) THE Assessee is a State owned Corporation enjoying the status of a Company for the assessment year 1998 -99. The assessee declared its total income of Rs. 2,58,41,720/ -. The return was taken for scrutiny. The Assessing officer disallowed the claim of Rs. 15 lakhs spent by the assesses under the head 'miscellaneous expenses' which was incurred by the assesses at the instance of the State to promote its business at any village known as 'Model Village' in Mysore district under the AG's Mysore Zilla Panchayath, Swasthi Gram Yojana, Claim was disallowed toy the assessing officer only on the ground that the amount spent by the assessee in a sum of Rs. 15 lakhs is not for its business purpose. Therefore the same was disallowed.

(3.) BEFORE the ITAT, the revenue contended that the judgment in Cheran Transport Corporation, has no applicable to the facts of the case on the ground that in that case when Transport Corporation on the request of the State Government, the amount was spent by it and therefore it was held that the amount spent by the other Corporation was for the benefit of the public and does not violate the public policy. The ITAT rejected the claim of the revenue on the ground that the assessee in the present case has spent amount of Rs. 15 lakhs for the development of modal village in Mysore district under the AG's Mysore Zilla Panchayath and as such, the developmental projects is to promote its business and the same is not opposed to public policy. Accordingly, appeal came to be dismissed, Aggrieved by the same, the present appeal is filed.