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TMI BlogExpenses or payments not deductible in certain circumstancesX X X X Extracts X X X X X X X X Extracts X X X X ..... day of April, 2016] no disallowance, on account of any expenditure being excessive or unreasonable having regard to the fair market value, shall be made in respect of a specified domestic transaction referred to in section 92BA, if such transaction is at arm's length price as defined in clause (ii) of section 92F. ] 3 [ * * * ] ( b ) The persons referred to in clause ( a ) are the following, namely :- (i) where the assessee is an individual, any relative of the assessee; (ii) where the assessee is a company, firm, association of persons or Hindu undivided family any director of the company, partner of the firm, or member of the association or family, or any relative of such director, partner or member; ( iii ) any individual who has a substantial interest in the business or profession of the assessee, or any relative of such individual; ( iv ) a company, firm, association of persons or Hindu undivided family having a substantial interest in the business or profession of the assessee or any director, partner or member of such company, firm, association or family, or any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as subsequent year) the assessee makes payment in respect thereof, otherwise than by an account payee cheque drawn on a bank or account payee bank draft 32 [ or use of electronic clearing system through a 39 [ bank account or through such other electronic mode as may be prescribed ] ] , the payment so made shall be deemed to be the profits and gains of business or profession and accordingly chargeable to income-tax as income of the subsequent year if the payment or aggregate of payments made to a person in a day, exceeds 33 [ ten thousand rupees ]: Provided that no disallowance shall be made and no payment shall be deemed to be the profits and gains of business or profession under sub-section (3) and this subsection where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, 34 [ or use of electronic clearing system through a 39 [ bank account or through such other electronic mode as may be prescribed ] , exceeds ten thousand rupees, ], in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revious year in which the sum is so paid. ] (8) 20 [ * * * ] 21 [ (9) No deduction shall be allowed in respect of any sum paid by the assessee as an employer towards the setting up or formation of, or as contribution to, any fund, trust, company, association of persons, body of individuals, society registered under the Societies Registration Act, 1860 (21 of 1860), or other institution for any purpose, except where such sum is so paid, for the purposes and to the extent provided by or under clause (iv) 27 [or clause (iva)] or clause (v) of sub-section (1) of section 36, or as required by or under any other law for the time being in force. (10) Notwithstanding anything contained in sub-section (9), where the 22 [ Assessing ] Officer is satisfied that the fund, trust, company, association of persons, body of individuals, society or other institution referred to in that sub-section has, before the 1st day of March, 1984, bona fide laid out or expended any expenditure (not being in the nature of capital expenditure) wholly and exclusively for the welfare of the employees of the assessee referred to in sub-section (9) out of the sum referred to in that sub-section, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13-7-2006. 7. Substituted for such expenditure shall not be allowed as a deduction by the Finance Act, 1995, w.e.f. 1-4-1996. 8. Substituted for two thousand five hundred by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. 9. Substituted for ten by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997. 10. Substituted for a crossed cheque drawn on a bank or by a crossed bank draft by the Taxation Laws (Amendment) Act, 2006, w.e.f. 13-7-2006. 11. Substituted for Income-tax by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 12. Substituted for two thousand five hundred by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. 13. Substituted for ten by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997. 14. Substituted for a crossed cheque drawn on a bank or by a crossed bank draft by the Taxation Laws (Amendment) Act, 2006, w.e.f. 13-7-2006. 15. Inserted by the Finance Act, 1969, w.e.f. 1-4-1969. 16. Substituted for a crossed cheque drawn on a bank or by a crossed bank draft by the Taxation Laws (Amendment) Act, 2006, w.e.f . 13-7-2006. 17. Omitted by the Direct Tax Laws (Amendment) Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atuity fund, a sum equal to at least fifty per cent of the admissible amount as reduced by the amount so utilised, is paid by the assessee by way of contribution to the approved gratuity fund before the 1st day of April, 1976, and the balance of the admissible amount or, as the case may be, the balance of the admissible amount as reduced by the amount so utilised, is paid by the assessee by way of such contribution before the 1st day of April, 1977. Explanation 1.- For the purposes of sub-clause (ii) of clause (b) of this sub-section, admissible amount means the amount of the provision made by the assessee for the payment of gratuity to his employees on their retirement or on termination of their employment for any reason, to the extent such amount does not exceed an amount calculated at the rate of eight and one-third per cent of the salary [as defined in clause (h) of rule 2 of Part A of the Fourth Schedule] of each employee entitled to the payment of such gratuity for each year of his service in respect of which such provision is made. Explanation 2.- For the removal of doubts, it is hereby declared that where any provision made by the assessee for the payment of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors. Earlier the sub-section (3) was substituted by the Finance Act, 2007, w.e.f. 1-4-2008. Prior to substitution it was read as under: (3) Where the assessee incurs any expenditure in respect of which payment is made, after such date (not being later than the 31st day of March, 1969) as may be specified in this behalf by the Central Government by notification in the Official Gazette, in a sum exceeding 4 [ 5 [ twenty ] thousand ] rupees otherwise than by 6 [ an account payee cheque drawn on a bank or account payee bank draft ] , 7 [twenty per cent of such expenditure shall not be allowed as a deduction ] Provided that where an allowance has been made in the assessment for any year not being an assessment year commencing prior to the 1st day of April, 1969, in respect of any liability incurred by the assessee for any expenditure and subsequently during any previous year the assessee makes any payment in respect thereof in a sum exceeding 8 [ 9 [ twenty ] thousand ] rupees otherwise than by 10 [ an account payee cheque dra ..... 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