TMI Blog2018 (9) TMI 1615X X X X Extracts X X X X X X X X Extracts X X X X ..... en 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. - 1541/Del/2014 - - - Dated:- 25-6-2018 - G.D. Agraw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6(1(ii). 3. None appeared on behalf of the assessee despite service of notice; therefore, we are disposing of the appeal on the basis of merits and after hearing the arguments placed by the Ld. DR. 4. After considering the submissions made by the Ld. DR as well as the finding given in the impugned order, we find that on merits the disallowance has been made simply on the ground that the amount of payment of bonus which is exceeding the limit of 8.33% as per the Bonus Act has been treated as ex gratia by the assessee which has been claimed u/s 37(1). 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 poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010) 324 ITR 100 (Bom) The object of the proviso to section 36(1)(ii)of the Income-tax Act, 1961 is to encourage the management to pay bonus in excess of what is statutorily bound to be paid to the employees provided the payment is justifiable as a reasonable payment . The assessee claimed deduction In respect of the ex gratia payment made to its employees which exceeded the prescribed limit of 8.33 per cent. The Deputy Commissioner of Income-tax (Assessment) disallowed the amount but the Commissioner (Appeals) and the Tribunal allowed deduction in respect of the ex gratia payment made to the employees, On a reference: Held, that the Tribunal was justified in holding that the ex gratia payment made in excess of the limit pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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