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September 2024

Section 37: Payments under a Memorandum of Settlement with the trade union — Expenditure not covered by Section 30 to Section 36, and expenditure made for purposes of business shall be allowed under Section 37(1) of the Act.: Section 40A(9) of the Act.

By Ajay R. Singh, Advocate
Reading Time 7 mins

CIT vs. M/s. Tata Engineering & Locomotive

Company Ltd.

[ITXA NO. 321 of 2008 & 2070 of 2009

A.Ys.: 1987–88 and 1988–89

Dated: 30th July, 2024, (Delhi) (HC)].

12. Section 37: Payments under a Memorandum of Settlement with the trade union — Expenditure not covered by Section 30 to Section 36, and expenditure made for purposes of business shall be allowed under Section 37(1) of the Act.: Section 40A(9) of the Act.

The two Appeals arise from common order dated 26th October, 2004 passed by the Income-tax Appellate Tribunal, and involve identical questions of law, extracted below:

“(A) Whether the ITAT was justified in law in upholding the action of the CIT(A) in deleting the disallowance of R1,96,71,842/- made under section 40A(9) of the Act ?

(B) Whether a payment made under a memorandum of settlement under the Industrial Disputes Act can be said to be a payment required by or under any law ?”

The short point that arose for consideration was whether the payments made under a M

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