Donations Disallowable Expenditure?

Donations to trusts can not be treated as business expenditure, the tax tribunal said while giving a ruling in a case involving an advocate and the tax authorities. The Income Tax Appellate Tribunal (ITAT) recently gave this ruling in a case pertaining to an advocate from Indore who claimed tax benefit on donation made to a charitable trust with instructions to use the money for buying books for the court library. Turning down the argument of the advocate that the money donated was business expenditure, the ITAT held, “No direct nexus has been established between the expenditure by way of donation and the profession of the assessee, such expenditure cannot be allowed deduction under section 37 of the IT Act (business expense).”