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2008 (8) TMI 504 - HC - Income TaxBusiness Expenditure- Excess amount paid- . The respondent has made payment of ex-gratia in the sum of Rs. 2,37,702 to its employees (in excess of the limit of 8.33 per cent. under the Payment of Bonus Act). The respondent claims the deduction of the said amount in computing its total income. The Deputy Commissioner of Income-tax (Assessment), Special Range-II, Panaji disallowed the said claim on the ground that it is an excess payment than permissible limits as per the Act. The Deputy Commissioner of Income-tax held that the payment of only 8.33 per cent. was in accordance with the Bonus Act and therefore, the payment of Rs. 2,37,702 which was in excess of 8.33 per cent. maximum statutory limit under the Act could not be allowed. Commissioner (Appeals) allow the appeal and the Tribunal allowed the deduction in respect of ex gratia payment made to the employees. Held that- the Tribunal was justified in holding that the ex gratia payment made in excess of the limit prescribed under the payment of Bonous Act, 1965, either under section 36(1)(ii) of the Act was allowable as business expenditure. The Tribunal was justified in holding that exgratia payment made over and above the amount paid in accordance with the Bonous Act was an alloweable expenditure though the payment did not cover contractual payment or customary payment.
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