- (1.) THIS appeal under Section 260A of the IT Act, 1961, is directed against the order of the Tribunal, Jaipur Bench, Jaipur, in ITA No. 1001/Jp/1992 and relates to the asst. yr. 1988 -89.
(2.) TWO questions have been suggested by the appellant -CIT to be the substantial questions of law, arising for consideration in this appeal: (1) Whether, in the facts and circumstances of the case, the Tribunal was right in allowing the claim of expenditure to the tune of Rs. 25 lakhs as covered under Section 37(1) of the Act when the contribution was clearly hit by overriding Section 40A(9) of the Act. (2) Whether, in the facts and circumstances of the case, the Tribunal was justified in allowing the commission of Rs. 8,76,965 without appreciating the fact that no services were rendered by Eastern Fabrics Corporation. So far as question No. 1 is concerned, the same relates to contribution made by the assessee towards M/s Bhilwara Export Promotion Fund during the relevant assessment year and the same has been disallowed by the AO, inter alia, on the ground that the benefit of the export promotion fund was not exclusively meant for the assessee nor the objects of the said fund were related to the business of the assessee and the fund was a pure and simple charitable object. The said question has been the subject -matter of DB IT Appeal No. 15/1999 for the asst. yr. 1987 -88 and the same has been decided by a detailed order on 15th Oct., 2003 holding that the Tribunal was right in allowing the claim of the assessee under Section 37(1), as the expenses were laid exclusively and wholly for the purpose of its business. It has also held that Section 40A(9) had no application to the contribution made to any fund unless it is made in his capacity as employer towards the fund which is for the benefit of its employees.
(3.) SO far as the second question is concerned, the amount claimed by the assessee has been disallowed by the AO on the ground that no services have been rendered by M/s Eastern Fabrics Corporation, for which commission could be paid. However, the Tribunal has allowed the claim on finding that for subsequent years claim of the assessee -respondent for deduction of amounts paid as commission to M/s Eastern Fabrics Corporation has been accepted by the AO and claim of the assessee has been allowed.;