INTRODUCTION
In India, people have immense faith in God and thus some amount of money is always deployed by people for Him. People, on regular basis, expend certain amount of money in performing different types of puja. These expenses are debited while preparing the Profit and loss account of the business concern of a person. But whether the same is allowed as deduction while computing the total income of the assessee for the Income Tax purpose? This question has always been in controversy and various judgements have been pronounced, both in favour and against the view that the expenses incurred in relation to the any puja can be claimed as deduction under the Income Tax Act.
EXPENSES ALLOWABLE UNDER THE INCOME TAX ACT
In Income Tax Act, a person can claim the deduction of an expense from the income derived from business and profession. The expenses which are incurred for the business purpose are only allowed as deduction u/s 30 to 44 DB of the I.T.Act, 1961. Not all but specific expenses are only allowed as deduction as business expenses in the Income Tax. However, there is a residuary section, sec 37(1), under which the expenses not covered under the specific sections 30 to 36, the deduction for those expenses can be claimed under this section provided certain other conditions are fulfilled.
As per sec. 37(1) Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee, laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head “Profits and gains of business or profession”.
Thus, for claiming the deduction u/s 37(1) of the Act following conditions are to be fulfilled:
· Such expenditure should not be covered under the specific sections i.e. sections 30 to 36
· The expenditure should not be of capital nature
· The expenditure should be incurred during the previous year
· The expenditure should not be of personal nature
· The expenditure should have been incurred wholly and exclusively for the purpose of the business or profession
· The business should be commenced.
The expenses incurred by the assessee in relation to any puja performed especially during the inauguration of the new office and at the time of Diwali Pujan do not fall under any specific Sec of the I.T.Act where the deduction of the same can be claimed. But, the same can be claimed as deduction under the residuary sec 37(1) of the Act provided the abovementioned conditions are fulfilled.
ADVERSE VIEW
However, various courts have taken a contrary view and have upheld disallowance of expenses relating to any puja treating them either as a personal expense of the director of the company and not the business expenditure. The High Court of Karnataka in the case of Sanghameshwar Coffee Estates Ltd. [1986] 160 ITR 203 and the Bombay High Court in the case of Kolhapur Sugar Mill Ltd. [1979] 119 ITR 387 has held that pooja is performed by the followers of a particular religion or faith. A company, which is only a juristic person, cannot claim to profess, practice, or follow any religion or faith. It was held that a company, which is a creation by legal fiction and not a real person made up of flesh and blood, cannot profess any religion and therefore, performance of pooja cannot be said to be the need of business.
However, the High Courts in the above cases did not consider the fact that any expenditure incurred by the director for or on behalf of the company has to be treated as a business expense. The pooja performed would motivate the employees and workers to contribute to the development and progress of the business of the company.
FAVOURABLE VIEW
The Punjab and Haryana High Court in the case of Atlas Cycle Industries Ltd. [1982] 134 ITR 458 has held that “no curbs can be placed on the discretion of the assessee to provide the type of recreation, which, according to it, would best advance the interest of the business. If the recreation provided, even if it is in the nature of the religious activity, has direct nexus with the welfare of a class of workers engaged by the assessee, it is wholly immaterial if the recreation provided is directly or indirectly connected with the religious tenets of a section of the society”.
Reliance can be placed in the case of Brijramandas and Sons [1983] 142 ITR 509 wherein the Allahabad High Court has held that Ganeshjiki Pooja expenses, which Hindu traders do in a customary way at the time of Mahurat or opening of their account books on the auspicious occasion of Diwali, are to be treated as expenditure laid out wholly and exclusively for the purpose of assessee’s business and is therefore allowable u/s 37(1) of the Income Tax Act, 1961.
AMBIGUOUS CBDT CIRCULAR
CBDT in its Circular no. 13/A/20/68-IT(A-II) dated 3.10.1968 has stated that as the expenses incurred on the occasion of Diwali and mahurat are in the nature of business expenditure, it has been decided not to lay down any monetary limits for the purpose of their allowance in the income-tax assessments subject to the Income-tax Officer being satisfied that the expenses are admissible as a deduction under the law and are not expenses of a personal, social or religious nature.
CONCLUSION
In our opinion, puja expenses incurred by the assessees are not personal expenses and are incurred wholly and exclusively for the business and should be allowed as deduction u/s 37(1) of the Act. Judiciary has taken different views on different occasions and CBDT circular has confounded the problem by giving the discretion to the assessing officer in the matter.
Thus, one has to wait for the authoritative pronouncement from the Supreme Court in the matter to clinch the issue. It is better that the business associations/ chambers of commerce can request the CBDT to unambiguously clarify the allowability of the same. After all, people’s faith in the providence to bring prosperity through business has inextricable linkage with the business of the assessee and as rightly held by the Punjab & Haryana High Court, puja is a sort of recreation provided to the employees.
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COMMITTED FOR THE GROWTH
Sunday, 23 November 2014
CONTROVERSY RELATING TO THE ALLOWABILITY OF PUJA EXPENSES UNDER THE INCOME TAX ACT
Company Secretary to act as compliance officer: SEBI
NEW DELHI, NOVEMBER 21:
Market regulator SEBI has mandated the appointment of Company Secretary as compliance officer for the purpose of the newly-framed listing regulations.
“This is a welcome move by SEBI as it will strengthen the compliance ecosystem in listed companies,” SN Ananthasubramannian, former President of the Company Secretaries Institute, said.
Besides fixing responsibility of compliance of listing regulations on the Company Secretary, the secretarial audit report requiring verification and reporting compliance/non-compliance of listing regulations by practicing Company Secretaries under the Company Law, will over time, facilitate better regulatory oversight and enhance improved compliance, he said.
The latest SEBI requirement widens the area of responsibilities of a Company Secretary and makes him solely responsible for compliance of listing regulations, according to capital market observers.
(This article was published on November 21, 2014)
Wednesday, 12 November 2014
IMPORTANT E-MAIL IDS OF DEALING OFFICIALS FOR STUDENT RELATED QUERIES
IMPORTANT E-MAIL IDS OF DEALING OFFICIALS FOR STUDENT RELATED QUERIES
S.NO. TYPE OF QUERY E-MAIL ID OF THE CONCERNED OFFICIAL
1 REGISTRATION LETTER AND IDENTITY CARD ankur.aggarwal@icsi.edu
2 NON-RECEIPT OF STUDY MATERIALS
(Foundation/ Executive/Professional) anju.gupta@icsi.edu /store@icsi.edu
3 PAPER-WISE EXEMPTION/ SWITCHOVER TO
NEW SYLLABUS dd.garg@icsi.edu
4 NON-RECEIPT OF STUDENT COMPANY SECRETARY/
FOUNDATION COURSE BULLETIN ankur.aggarwal@icsi.edu
5 CHANGE OF ADDRESS, E-MAIL ID, PHONE NUMBER
AND OTHER PARTICULARS ankur.aggarwal@icsi.edu
6 CLASS ROOM TEACHING surya.mishra@icsi.edu
7 COMPUTER TRAINING vinny.mehta@icsi.edu
8 ADMIT CARD/ ROLL NUMBER FOR EXAMINATIONS enroll@icsi.edu
9 ISSUE OF PASS CERTIFICATES siyaram@icsi.edu
10 ISSUE OF TRANSCRIPTS siyaram@icsi.edu
11 EXEMPTION FROM TRAINING hema@icsi.edu
12 ANY MANAGEMENT TRAINING / APPRENTICESHIP monika.arora@icsi.edu/
13 TRAINING RELATED QUERY shrutib.gupta@icsi.edu
14 15 DAYS' SPECIALISED TRAINING nidhi@icsi.edu
15 STATUS OF ACS MEMBERSHIP APPLICATION Yogesh.singh@icsi.edu
16 NON-RECEIPT OF MEMBERSHIP NUMBER meenakshi.gupta@icsi.edu
17 OUT OF STOCK POSITION OF STUDY MATERIALS store@icsi.edu
18 REFUND OF FOUNDATION/ EXECUTIVE/
PROFESSIONAL EXAMINATION FEE dinesh.kumar@icsi.edu
19 REFUND OF FOUNDATION / EXECUTIVE REGISTRATION FEE shalini@icsi.edu
20 REFUND OF PROFESSIONAL PROGRAMME REGISTRATION FEE dd.garg@icsi.edu
21 MARK SHEETS exam@icsi.edu
22 VERIFICATION OF MARKS exam@icsi.edu
23 VERIFICATION OF STUDENT QUALIFICATION siyaram@icsi.edu
24 MERIT-CUM-MEANS ASSISTANCE & MERIT SCHOLARSHIPS exam@icsi.edu
25 ICSI STUDENT EDUCATION FUND TRUST surya.mishra@icsi.edu
26 ENROLLMENT TO PROFESSIONAL PROGRAMME dd.garg@icsi.edu
27 TECHNICAL PROBLEMS AT THE WEBSITE info@icsi.edu
28 REGISTRATION DENOVO/ EXTENSION dd.garg@icsi.edu
29 CHANGE OF ELECTIVE SUBJECT dd.garg@icsi.edu
30 ANY OTHER QUERY (SPECIFY) surya.mishra@icsi.edu
Wednesday, 22 October 2014
WISH ALL YOU HAPPY DIWALI
May This Diwali be as bright
as ever.
May this Diwali bring joy,
health and wealth to you.
May the festival of lights
brighten up you and your near
and dear ones lives.
May this Diwali bring in u the
most brightest and choicest
happiness and love you have
ever Wished for.
May this Diwali bring you the
utmost in peace and
prosperity.
May lights triumph over
darkness.
May peace transcend the earth.
May the spirit of light
illuminate the world.
May the light that we
celebrate at Diwali show us
the way and lead us together
on the path of peace and
social harmony
Monday, 1 September 2014
MCA LATEST CIRCULARS
MCA has abolished concept of maximum useful life of asset; allows flexible life supported by technical advice.
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Saturday, 30 August 2014
Combined List of Applicable Sections and Rules of ‘Companies Act, 2013′ & ‘Companies Act, 1956′
Combined List of Applicable Sections and Rules of ‘Companies
Act, 2013′ & ‘Companies Act, 1956′
Applicable Section of ‘The Companies Act, 2013′
Section
2 Clauses (1) to (28), (29)[ except sub-clause (iv) ] , (30) to (40) , (41)
[except first proviso], (42) to (66), (67)[except sub-clause (ix) , (68) to
(95); Sections 3, to 6, 7 (except sub-section (7), 8 (except sub-
section (9), 9 to 13,
14 (except second proviso to sub section (1) and sub- section (2)), 15 to 47,
49 to 54, 55 except sub-section (3) , 56 to 60, 61 except proviso to clause (b)
of sub-section (1), 62 except sub- sections (4) to (6), 63 to 65, 67 to 70, 71
except sub- section (9) to (11), 72 , 73, Sub-section (1) of 74, 76 to 96 ,100
to 118, 119 (except sub-section (4)), 120 to 123, 126 to 129, 133 to 139, 140
[except second proviso to sub-section (4) and sub-section (5), 141 to 168, 169
except sub-section (4), 170 to 211, 212
[except sub –section
(8) to (10)]; 214, 215, 216 [except sub-section (2)], 217, 219, 220, 223,
224[except sub- section (2) and (5)], 225, 228, 229, 366, to 369, 370[except
proviso], 371, 374, 379 to 389, 390, Sub- section (1) 391, 392 to 398, 399
except reference of word Tribunal in sub- section (2), 400 to 414, 439, 442 to
464 and 467 to 470 ; Schedule I, II, III,IV,V,VI and VII.
Rules under ‘The Companies Act, 2013′ which have been notified
and are applicable for December 2014 Examinations
Companies (Registration
of Charges) Rules, 2014
Companies (Management
and Administration) Rules, 2014
Companies (Declaration
and Payment of Dividend) Rules, 2014.
Companies (Accounts)
Rules, 2014.
Companies (Audit and
Auditors) Rules, 2014.
Companies (Appointment
and Qualification of Directors) Rules 2014
Companies (Meetings of
Board and its powers) Rules 2014
Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014.
Companies (Inspection,
Investigation and Inquiry) Rules, 2014
Companies (Authorized
to Registered) Rules, 2014
Companies
(Registration Offices and Fees) Rules, 2014
Nidhi Rules, 2014.
Companies
(Registration of Foreign Companies) Rules, 2014.
Companies
(Adjudication of Penalties) Rules, 2014.
Companies
(Miscellaneous) Rules, 2014.
NCLT (Salary, allowances
and other terms and conditions of service of president and other members)
Rules, 2013
NCALT (Salaries,
Allowances and other terms and conditions of service of chairperson and other
members) Rules, 2013
Companies (Cost
Records and Audit) Rules, 2014
Applicable Sections of ‘The Companies Act, 1956′
Sections 10,10E,10F,
Proviso to sub section (1) of section 31, Sub-section (2A) of section 31, 58A
(5), (8) &(10), Proviso to section 80A(l) and 80A(2), Sub- section (4), (5)
&(7) of section 81, 94A, 100 to 107, 117B(4), Sub- section (4) & (5) of
section 117C, 167, 168, 186, 196(4), 205A, 205B, 205C, 210A, Proviso to sub
section (3) of section 225, 237, 243, Sub-section (1A) of section 247, 250,
250A, 251, Sub-section (4) of section 284, 390 to 394, 394A, 395, 396, 396A,
397, 398, 399, 401 to 404, 406, 407, 425 to 560, proviso to section 577, 580,
581, 581A to 581ZT, 582 to 587, 589, 590, 602(b) & (c), 621A, 622, 634A,
635B, 645, 652, to 655 and 658.
The Rules under the Companies Act, 1956 which continue to be in
force as on 30th June, 2014 and applicable for December 2014 Examinations:
Companies (Court)
Rules, 1959
Companies Liquidation
Accounts Rules, 1965
Companies (Official
Liquidator’s Accounts) Rules, 1965
Companies Law Board
Regulations, 1991
Companies Law Board
(Fees on Applications and Petitions) Rules, 1991
Company Law Board
(Qualifications, Experience and other conditions of service of members) Rules,
1993
The Offices of the
Company Law Board Benches (Destruction of Records) Rules,1980
Investor Education and
Protection Fund (Awareness and Protection of Investors) Rules, 2001
Producer Companies
(General Reserve) Rules, 2003
Companies (Accounting
Standards) Rules, 2006
Companies (Filing of
Documents and Forms in Extensible Business Reporting Language) Rules, 2012.
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