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2023 (1) TMI 851 - AT - Income TaxDisallowance of alleged bonus paid by applying the provisions of section 43B - HELD THAT:- A perusal of the profit and loss account of the assessee showing employee benefit expenses shows that there is labour payment to the extent of Rs. 2.29 crores, staff salary of Rs. 10.80 lakhs and bonus has been shown at Rs. 24.92 lakhs. Admittedly, no statutory bonus is applicable to the labourers. These payments of bonus @ Rs. 8000/- per labour for 284 labourers, admittedly would not be statutory bonus but ex-gratia payment. As it is not statutory bonus, the provisions of section 43B also would not apply. The issue by the AO is whether the bonus is liable to be allowed or disallowed u/s. 43B. The issue is not in respect of payment of the bonus to the said labourers. This being so, we are of the view that the issue cannot be restored to the file of the AO for verification of the payment. As the payment is not statutory payment of bonus under Bonus Act, obviously, the provisions of section 43B would not apply to the same. Consequently, the disallowance as made by the AO and confirmed by the ld. CIT(A) by applying the provisions of section 43B on the bonus paid stands deleted. Ground No. 3 of the assessee stands allowed. Higher rate of depreciation - HELD THAT:- A perusal of the profit and loss account clearly shows that as specifically mentioned by ld. DR that the assessee has not shown any hire charges in respect of heavy earth moving machineries used by the assessee in its business of the contract of road building. The higher rate of depreciation admittedly is permissible when heavy earth moving machinery is put on hire in the business of the assessee. The assessee has not hired heavy earth moving machinery in the business of the assessee. This being so, we are of the view that the assessee is not entitled to the higher rate of depreciation in respect of said plant and machinery. Ground No. 4 is held against the assessee and addition made by the AO and confirmed by ld. CIT(A) stands confirmed. Disallowance u/s 40(a)(ia) - Explanation to the provisions of section 40(a)(ia) of the Act has been introduced w.e.f. 1.6.2015, wherein, the disallowance has been reduced from 100% to 30% - HELD THAT:- A perusal of the Explanation to Section 40(a)(ia) of the Act clearly shows that the disallowance on account of non-deduction of tax is restricted to 30%. Consequently, the Assessing officer is directed to restrict the disallowance to 30% as against 100% made by the AO. Ground No. 5 stands partly allowed.
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