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TMI Blog2018 (9) TMI 1615X X X X Extracts X X X X X X X X Extracts X X X X ..... us which was 8.33 after invoking the provision of section 43B. 2. In the course of the assessment proceedings, AO noted that assessee has shown bonus payable amounting to Rs. 10,12,264/- and has only added back amount of Rs. 4,21,608/- in the computation of income. In response to the show cause notice, assessee informed that the amount which has been added back and disallowed is 8.33% bonus which was as per the Bonus Act 1965 and balance is ex gratia to each staff. AO held that the balance sum of Rs. 5,90,656/- is disallowable u/s 43B. On the same disallowance, AO has levied the penalty of Rs. 2,00,763/- on the ground that assessee has claimed incorrect expenses. Ld. CIT (A) too has confirmed the said penalty on the ground that such an ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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). In fact the decisions cited by the Ld. CIT(A) in his impugned orders are all in favour of the assessee which is evident from the following judicia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CAL) Section 36(1 )(ii) read with section 37(1) of the Income-tax Act. 1961 -Bonus or commission-Assessment year 1981-82-Assessee company made ex gratia payment of bonus to employees and workers - It was not disputed that payment was made for purpose of business - Whether even though ex gratia payment does not form part of bonus as contemplated under section 36(1)(ii), since payment satisfied three conditions laid down in second proviso to section 36(1)(ii), payment would be deductible under section 36(1 )(ii) * Held, yes. (3) CIT v. Radico Khaltan Ltd. [2005] 2741TR 354 (ALL.) Section 36(1)(ii) of the Income-tax Act, 1961 - Bonus or commission - Assessment year 1990-91 - Whether ex- gratia payment towards bonus is an allowable deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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