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2020 (2) TMI 1230 - AT - Income TaxAddition u/s 37(1) under the Head “Salary Expenses” - HELD THAT:- The Assessee Corporation is receiving grants on annual basis and the said grants have been used by the Corporation in accordance with the directions of the Government. In preceding assessment year, A.O. has accepted the same claim of the assessee without any objection. Therefore, when same policy have been followed by the assessee and accepted by the A.O, he should not have taken a different stand. Further assessee has made it very specifically clear that salary is paid to all old employees who worked for the assessee and expenses are genuine. All TDS have been deducted on the salary and paid to the Government. All the employees have worked for assessee. It is, therefore, clear that assessee incurred the salary expenses which are exclusively for the purpose of business activities. No case is made out by the A.O. by making salary payment, if the same is offence or which is prohibited by Law. Therefore, Explanation-1 to Section 37 would not be attracted in the case of assessee, which is contended in the grounds of appeals by the Revenue. There is, thus, no justification to interfere with the Orders of the Ld. CIT(A). We confirm his finding and dismissed the appeal of the Revenue.
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