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TMI Blog1997 (3) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed under s. 40(c) r/w s. 40A(5) of the IT Act. In further appeal, the CIT(A) has confirmed the action of the AO. According to the CIT(A) the ceiling on perquisites under s. 40A(5) is 1/5th of the salary and the excess over 20 per cent of the salary which comes to Rs. 11,940 has rightly been disallowed by the AO. 2. Before us, Shri M.K. Patel, Advocate, the learned counsel for the assessee while relying upon the decision of Hon'ble Gujarat High Court in the case of Addl. CIT vs. Tarun Commercial Mills Ltd. 1977 CTR (Guj) 141 submitted that the provisions of s. 40A(5) are of general nature applicable to employees while the provisions of s. 40(c) are applicable to the Director(s) of a company and therefore, special provisions of s. 40(c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Shri S.K. Behal who is admittedly the managing director of the assessee- company and hence, the disallowance is liable to be deleted. We accordingly delete the same. 5. The next ground relates to deduction under s. 80-I of the IT Act. During the assessment year under consideration, the AO allowed deduction under s. 80-I of the Act at Rs. 89,490 as against the assessee's claim of Rs. 1,11,863. From the gross total income of Rs. 4,47,451, the AO has first allowed deduction under s. 80HH at 20 per cent of the profit which comes to Rs. 89,470 and from the resultant amount of (4,47,451-Rs. 89,470) Rs. 3,57,961. Deduction under s. 80-I has been allowed at the admissible rate of 25 per cent which works out to Rs. 89,470. The assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to deduction under s. 80HH, s. 80-I and or s. 80J then the first of the deduction that would have to be allowed is a deduction under s. 80HH. This only is a clarification in case of such successive reliefs that the relief in respect of earlier section would have to be allowed in full. This is amply made clear by the provisions that is contained in s. 80A(2) which provides that the aggregate amount of the deductions under this Chapter shall not in any case exceed the gross total income of the assessee. If the legislature intended to give the deduction on the basis of residual income after providing of relief under each of the sections they would have provided clearly in that fashion. The section as it stands and as it is worded clearl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his ground raised by the assessee. ITA No. 4874/A/91 In ITA No. 4874/A/91, the first ground relates to disallowance of Rs. 21,237 out of bonus payment. The AO found that the aforesaid amount was paid to the workers of the assessee-company on the occasion of Diwali festival. According to the AO, the said payment was made over and above the bonus paid of Rs. 69,734. The AO further observed that the disputed payment was in excess of the maximum bonus payable under the payment of Bonus Act and, therefore, the same was not allowable either under s. 36(1)(ii) or under s. 37 of the IT Act, 1961. The said action of the AO was confirmed by the CIT(A). The assessee's explanation was that there was some discontent amongst the workers and agitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the matter, we hold that payment in question has been made for the purpose of business expediency and to maintain good relations with the workers and hence it should have been allowed under s. 37(1) of the IT Act. Consequently, we allow this ground and delete the disallowance. 4. The next ground of appeal raised by the assessee reads as under: "In the facts and circumstances of the case, the learned CIT(A)-I, Baroda has further erred in confirming the disallowance of Rs. 12,435 being the perquisites paid to Shri S.K. Behal, managing director of the company, on the ground that the ceiling for perquisites under s. 40A(5) is 1/5th of the salary and the excess of 20 per cent of the salary has been rightly disallowed under s. 40A(5)." In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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