Scope of Sec.40A(9) with respect to contributions towards Employee's Welfare Cooperative Society. - Income Tax - 1799/CBDT

INSTRUCTION NO. 1799/CBDT Dated: October 3, 1988 Instances have come to the notice of the Board, where Assessing Officers have allowed deduction in respect of contributions made to Employees' Welfare Co-operative Society at the time of making assessment of the employer company. The deduction was allowed on the presumption that contribution to Employees' Welfare Co-operative Society are not hit by the provisions of Section 40A(9) of the Income-tax Act. The Board is of the view that the phrases "Association of persons" and "Body of individuals" appearing in Section 40A(9) are wide enough to include an Employees' Welfare Co-operative Society. Therefore, any contribution made to such Employees' Welfare Society should not be allowed as a deduction in the case of the employer Company in view of Section 40A(9) of the Incometax Act, unless such contribution is required by or under any other law for the time being in force. In respect of completed assessments, wherever possible, remedial action should be taken to withdraw the deduction already allowed in respect of such contributions. 2. This may be brought to the notice of officers working in your charge.