Stay abreast with the latest developments in the professional domain along with in-depth analysis through the monthly BCA Journal. Get access to an engaging library of researched publications from the BCAS stable.
Learn MoreImportant Amendments by The Finance (No. 2) Act, 2024 – Charitable Trusts
Read MoreImportant Amendments by The Finance (No. 2) Act, 2024 – Capital Gains
Read MoreImportant Amendments by The Finance (No. 2) Act, 2024 – Buy-Back of Shares
Read MoreImportant Amendments by The Finance (No. 2) Act, 2024 – Re-Assessment Procedures
Read MoreImportant Amendments by The Finance (No. 2) Act, 2024 – Block Assessment
Read MoreImportant Amendments By The Finance (No. 2) Act, 2024 – Other Important Amendments
Read MoreBCAJ Brieficles are short-format, web-only articles on contemporary topics of professional importance that are open-for-all to read & share.
Explore BrieficlesExplore past issues of BCA Journal & indulge in a treasure trove of high-quality professional content across format of print, videos & learning events from the BCAS stable.
Learn MoreMonthly mouth-piece of BCAS, the BCA Journal is a leading publication that has been in continuous circulation for more than 53 years. Over the years the BCAJ has become synonymous with high-quality & authentic content across fields of finance, accounting, tax & regulatory matters. The BCAJ has wide circulation across India & commands huge respect amongst the Chartered Accountants` community.
Learn MoreFor queries, collaborations, and insights to forge, Drop a line, share thoughts, inquiries galore, At BCAJ, your messages, we eagerly explore.
Learn More
45 Business expenditure : Bonus : S.
36(1)(ii) and S. 37(1) of Income-tax Act, 1961 : A.Y. 1993-94 : Ex gratia
payment over and above statutory limits prescribed under the Payment of Bonus
Act, 1965, is allowable as business expenditure.
[CIT v. Maina Ore Transport (P) Ltd., 218 CTR 653 (Bom.)]
In the A.Y. 1993-94 the assessee had made payment of ex
gratia in the sum of Rs.2,37,702 to its employees in excess of the limit of
8.33% prescribed under the Payment of Bonus Act. The assessee had claimed the
deduction of the said ex gratia payment as business expenditure. The AO
disallowed the claim on the ground that it is in excess of 8.33% maximum
statutory limit under the Act. The CIT(A) allowed the deduction holding that the
amount was paid to maintain healthy relations and industrial peace. The Tribunal
confirmed the decision of the CIT(A).
On reference by the Revenue, the Bombay High Court upheld the
decision of the Tribunal and held as under :
“Ex gratia payment in excess of the limits prescribed under
the Payment of Bonus Act, 1965, is allowable as business expenditure, although
the payment did not cover contractual payment or customary payment.”