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2021 (3) TMI 528 - HC - Income TaxAllowable business expenditure - monetary incentive provided to various District Central Co-operative Banks (DCCB's) and Primary Agricultural Co-operative Societies (PACS) - HELD THAT:- AO as relying on Circular issued by Central Board of Direct Taxes dated 22.08.1973 has already allowed the incentive paid to member bank by the assessee for the Assessment Year 2008-09 as revenue expenditure. The Commissioner of Income Tax (Appeals) has also while placing reliance on the circular issued by the Central Board of Direct Taxes (CBDT) has held that the Assessing Officer has misunderstood the term 'net profit' used in Act, which differs from the expression 'net profit' as used in the context of provisions of Income Tax Act, 1961. It has further been held that the aforesaid circular allows payment which are made in the nature of incentives and since, the payment in question has been made by the assessee to its member banks as incentives, the aforesaid amount is allowable as expenditure. The assessee has incurred the expenditure during the course of the business which was duly approved by the board of the assessee in its meeting. Revenue is not opposed to the action of the assessee giving incentives to the member banks but is only opposed to the manner in which the incentive has been paid. It is not for the revenue to decide how the incentive has to be paid by the assessee to its member banks and the revenue cannot sit in an armchair of the businessman and to decide as to the manner in which payment has to be made. In view of preceding analysis, the substantial question of law framed by a bench of this court is answered in favour of the assessee.
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