TMI Blog1996 (8) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of Rs. 67,361 as ex gratia payment. The AO noted that the said amount which was contended to be ex gratia payment by the assessee is neither in the nature of bonus nor in the nature of salary and the same was not allowable under s. 37(1) of the Act. The assessee was called upon as to how the same was allowable; then it was asserted that it was just like ex gratia payment to give an incentive to the supervisory staff who were not covered under the Payment of Bonus Act. The assessee's claim was not found allowable and the amount of Rs. 67,361 was disallowed. The assessee appealed and the same were the pleas before the CIT(A). It was pleaded that amount was paid as ex gratia and not in lieu of bonus. It was paid to supervisory staff who we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee should be disallowed. 4. As against it, the learned counsel for the assessee supported the view of the learned CIT(A) and took us to the copy of note given by assessee before CIT(A) regarding ex gratia payment. It has been mentioned that the learned AO has wrongly treated the payment as ex gratia payment while as a matter of fact the amount was paid to its supervisory staff and senior employees in the nature of incentive for hard and devoted work done by them during the year and at the most the same can be termed as establishment/salary type nature and should be allowed as a whole. He also pointed out the details of ex gratia payment made to employees which were appearing at pp. 4 and 5 of the paper book and further pointed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d this ground is rejected. 6. The other ground relates to addition of Rs. 18,168 by AO by applying the provisions of s. 40A(5) of the Act. AO noted that the assessee-company had made different types of payments including salary, perks, etc. to two of its Directors, namely, (i) Shri Tejrai, and (ii) Shri G.B. Singh. Applying the provisions of s. 40A(5) of the Act total disallowance was worked out by him at Rs. 18,168. The assessee went in appeal and the main contention was that provisions of s. 40(c) of the Act were applicable in the case of director(s) and not the provisions of s. 40A(5). This contention was upheld by the CIT(A) who deleted the said disallowance. 7. The learned Departmental Representative supported the view of the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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