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2017 (7) TMI 1372 - HC - Income TaxAllowing exgratia payment as a deductible expense - exgratia payment by its very nature of payment is a favour having no nexus with commercial consideratio - Tribunal allowed claim - HELD THAT:- Section 63 of the Act empowers the Board of Directors to approve payment of exgratia amount to its employees. It is also observed by the Tribunal that the assessee has been extending incentives to employees for the preceding years and the subsequent years also and the same is accepted by the Revenue. Tribunal has also relied on the Judgment of this Court in the cases of CIT Vs. Maina Ore Transport P. Ltd., [2008 (8) TMI 504 - BOMBAY HIGH COURT] and Shahzada Nand & Sons [1977 (4) TMI 4 - SUPREME COURT]wherein it has been held that exgratia payment made by the employer to its employees is on account of commercial expediency and hence allowable. In the case of Mafatlal Fine Spg. & Mfg. Co.Ltd [2003 (2) TMI 27 - BOMBAY HIGH COURT] relied by the Revenue, there was no evidence to show the agreement between the assessee and the employees and the earning of the assessee or to show that exgratia payment is reasonable or in accordance with the provisions at the relevant time.The practice of exgratia payment is evident from the observations of the Tribunal. For the preceding year and the subsequent years the department has allowed deduction in respect of exgratia payment. No substantial question of law
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