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In a strange case that came before Hon’ble Gujrat High Court, one fertiliser company in tax report [2024] 470 ITR 363 (Guj) using brand name ‘Sardar’ donated INR 10 crores to Sardar Vallabhbhai Rastriya Ekta Trust for “statue of unity” construction claiming the same as business deduction as it held the apprehension that the construction of a statue of Sardar Vallabhbhai Patel would significantly enhance the value of the brand name under which the assessee carries on its business. And that would thus help enhance sales as well as exports of the company’s agro products and as a corollary enhance the brand value of other products of the company.

The Tribunal and the Court found it as a reasonable apprehension to advance assessee’s case for deduction.

This kind of favoured decision may help companies make claim for deduction for purchase of electoral bonds for one or the other apprehensions that it would help them grow in their business.
Such argument cannot be easily bought as no direct connection can be established between the statue and the business. Further, if it was only the name then business would grow on this premise without even giving donation.

The judgement may not hold waters in the days to come as and when it faces challenge from revenue.


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