dissenting: The applicable taxing statute permits a corporation to deduct from gross income “ all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.” The petitioner, operating a department store in Buffalo, New York, made certain payments in 1928 to certain charitable institutions which it charged on its books of account as advertising expenses and deducted from gross income in its tax return as ordinary and necessary expenses. The evidence shows that the payees were customers of the petitioner and that the pay*426ments were recurrent. Weldon D. Smith, vice president and treasurer of the petitioner, testified that in arriving at the amounts paid—
We look over the amount of business that we get from those organizations here and the amount of business that we get from the officers of those organizations, and we more or less add to that our own charitable feelings, and decide on a certain amount.
On cross-examination he was asked:
Now, with reference to these charitable contributions, you stated that they were made in part from the charitable feelings of your organization. Do they bear any direct relation to the amount of business done?
A. Yes, I think they do; that has been said.
The respondent in article 562 of Regulations 69 has provided:
* * * Donations which legitimately represent a consideration for a benefit flowing directly to the corporation as an incident of its business are allowable deductions from gross income. * * *
Article 121 of Regulations 74, applicable to the taxable year under review, provides in part: “A taxpayer is entitled to deduct the necessary expenses paid in carrying on his business from his gross income from whatever source.”
The question as to whether contributions of the character of those herein involved are deductible from gross income has been before this Board in many different cases. See cases cited in Corning Glass Works v. Lucas, 37 Fed. (2d) 798. We have allowed as deductions from gross income similar payments in First National Bank of Omaha, 17 B.T.A. 1358; Hirsch-Weis Mfg. Co., 14 B.T.A. 796; Merchants Transfer & Storage Co., 17 B.T.A. 290; First National Bank in St. Louis, 23 B.T.A. 1125; Old Mission Portland Cement Co., 25 B.T.A. 305; Evening Star Newspaper Co., 28 B.T.A. 762.
In Kornhauser v. United States, 276 U.S. 145, the question before the Supreme Court was whether attorneys’ fees for defending an action by a former partner for accounting of “business earnings” were deductible from gross income. The Court of Claims held that they were not business expenses but were personal living or family expenses and were therefore not a legal deduction from gross income. Kornhauser v. United States, 62 Ct. Cls. 647. This decision was reversed by the Supreme Court. In its opinion the Court stated:
In Appeal of F. Meyer & Brother Co., 4 B.T.A. 481, the Board of Tax Appeals held that a legal expenditure made in defending a suit for an accounting and damages resulting from an alleged patent infringement was deductible as a business expense.
The basis of these holdings seems to be that where a suit or action against a taxpayer is directly connected with, or,- as otherwise stated (Appeal of Backer, 1 B.T.A. 214, 216) proximately resulted from, his business, the expense incurred *427is a business expense within the meaning of section 214 (a), subd. 1, of the act. [Revenue Act of 1918.] These rulings seem to us to be sound and the principle upon which they rest covers the present ease. * * *
I am of the opinion that the same principle is applicable to the facts involved herein.
In Corning Glass Works v. Lucas, supra, the question before the court was whether a corporation was permitted to deduct from gross income $25,000 representing a contribution to the building fund of a hospital located in a town having a population of 15,000, paid in part to avoid enlarging its dispensary facilities at the factory. It was held that the amount was a legal deduction from gross income as a business expense. In the course of its opinion the court referred to a decision of an English court, Hutton v. West Cork Ry. Co., 23 Ch. Div. 654, 671, and quoted therefrom as follows:
* * * Most businesses require liberal dealings. The test there again is not whether it is ’bona, flete, but whether, as well as being bona fide, it is done within the ordinary scope of the company’s business, and whether it is reasonably incidental to the carrying on of the company’s business for the company’s benefit. * * *
To the same effect is American Rolling Mill Co. v. Commissioner, 41 Fed. (2d) 314. In that case the plaintiff claimed the deduction from gross income of $360,000 which it had contributed to a civic fund raised in Middletown, Ohio. Numerous charitable organizations were the beneficiaries of this fund. The Board held that the amount was not a legal deduction from gross income of the year 1920, the year in which paid. The Circuit Court of Appeals for the Sixth Circuit reversed the Board and held that the amount was a legal deduction. It quoted with approval the decision of the Court of. Appeals of the District of Columbia in Corning Glass Works v. Lucas, supra, to the effect that in that case the donation was “ reasonably incidental to the carrying on of the company’s business for the company’s benefit ” and was therefore a legal deduction. The court further stated: “ The question always is whether balancing the outlay against the benefits to be reasonably expected, the business interest of the taxpayer will be advanced.”
The income tax is imposed upon “ gains, profits, and income.” It falls upon the net income determined by deducting from the gross income certain items among which are the ordinary and necessary expenses. I can not believe that it was the intention of Congress to disallow the deduction of expenses of the nature of those involved herein. In no sense did they constitute gifts. It unquestionably wpuld.have been to the detriment of the petitioner’s business to have failed to make the payments. Congress has not forbidden their deduction. Although the evidence in this case is not as full or satis*428factory as might be wished, I am of opinion that the amount was a legal deduction from gross income. I think it is wrong to assume that because Congress has not provided specifically that a corporation may deduct payments of this character from gross income it is therefore prohibited from deducting them from gross income. The whole current of judicial opinion is to the contrary.