9911796707
TMI Blog2004 (12) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and its employees which were in operation during the relevant period and obligating the assessee to incur such expenses at the pains of punishment for non-compliance thereof under the Industrial Disputes Act. 2. However, the audit report submitted by the auditors of the company shows that there was auditors' note that the expenses are not eligible for deduction for computing the total taxable income of the assessee under Section 40A(9) of the IT Act, 1961. The said provision reads as under: 40A(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, AOP, BOI, society registered under the Societies Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 by him, is not by way of contribution to any fund but such amount has been spent as expenses for labour welfare activities for securing and advancing its own business interest, both the authorities have not gone into the question and decided it in accordance with law but has merely disallowed the claim by referring to the auditors' note, which in our opinion, cannot be substituted for adjudication by the AO and CIT(A). It amounts to abdication of jurisdiction vested in these authorities to decide issues raised before it in the light of relevant law and material before it, merely on the opinion of the auditor. The opinion of audit or may serve the purpose of drawing the attention of AO to it, but it cannot alone be the foundation of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to relevant law and has held all the activities referred by the assessee as the employees' welfare activities, without examining the true nature of the amount laid down by the assessee, to be as expenditure wholly and exclusively for business purposes. Whether the same was by way of contribution or by way of amount spent during the year in welfare activity, has not been examined. 10. As the nature of expenses referred to above by us suggests that all expenses are for different purposes, for different activities and some of them are for the activities directly carried out by the employees, some by the employer and employee jointly and some of the expenses have been outright payment to another institution, with whom no employee-employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded on 15th Oct., 2003 which may be taken into consideration. 13. Accordingly, the Appeal Nos. 29 of 1999 and 26 of 2000 are allowed. The judgment of the Tribunal in each case is set aside to the extent it holds the amount in question is deductible under Section 37 and the case is sent back to the Tribunal for deciding the allowability of said amount as deductions afresh. So also IT Ref. No. 58 of 1999 is concerned, we direct the Tribunal to submit a supplementary statement of case in accordance with finding reached by it about this issue under the aforesaid directions. 14. The appeal may be decided as far as possible within four months from the date of receipt of this order. 15. There shall be no orders as to costs in these app ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
