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2018 (9) TMI 1615 - AT - Income TaxPenalty proceedings u/s 271(1)(c) - disallowance of ex-gratia payment to the staff in excess of entitlement of bonus which was 8.33 after invoking the provision of section 43B - Held that:- AO has invoked the provision of section of 43B(c) holding that such a difference of ₹ 5,90,656/- falls within the ambit of scope of 43B r.w.s. 36(1)(ii). However it has not been pointed out by him that such an ex-gratia payment, whether falls within the provision of Bonus Act or not; or whether such a payment made to its labourers and staff was not during the course of carrying on the business or for commercial expediency. Here the payment has been treated as ex-gratia by the assessee which otherwise is allowable but AO has treated it as part of bonus and brought within the scope of section 43B denied simply because the AO has tried to bring such payment within the scope of section 43B, this action of the AO does not lead to an inference that either the assessee has furnished inaccurate particulars of income or has made any false claim. Even if such ex-gratia payment is in excess of the limit prescribed under the payment under Bonus Act or u/s 36(1)(ii), but same being in the nature of business expenditure cannot be held that claim of such expenditure warrants any levy of penalty u/s 271(1)(c). - Decided in favour of assessee.
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