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| The Tax Publishers2019 TaxPub(DT) 4733 (Bom-HC) : (2020) 420 ITR 0376 : (2020) 314 CTR 0542 INCOME TAX ACT, 1961
Section 40A(9)
Sub-section (9) of section 40A was inserted to discourage practice of creation of bogus funds and not to hit genuine expenditure for welfare of employees. Undisputedly. AO had not doubted bona fides of assessee in creation of fund for health care of retired employees and also such fund was not controlled by assessee-bank, accordingly, AO was not justified in making disallowance on the ground of non-recognition of fund under section 36(1)(iv) or (v).
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Business disallowance under section 40A(9) - Contribution to medical benefit scheme specially envisaged for retired employees - Disallowance for want of recognition of fund - No doubt as regards bona fides in creation of fund
Assessee claimed deduction of expenditure of Rs. 50 lakhs towards contribution to a fund created for health care of retired employees. AO held that such fund not being one recognized under section 36(1)(iv) or (v) claim of expenditure was hit by section 40A Held: Sub-section (9) of section 40A was inserted to discourage practice of creation of bogus funds and not to hit genuine expenditure for welfare of employees. Undisputedly. AO had not doubted bona fides of assessee in creation of fund for health care of retired employees and also such fund was not controlled by assessee-bank, accordingly, AO was not justified in making disallowance.
REFERRED : P. Balakrishnan, CIT v. Travancore Cochin Chemicals Ltd. (2000) 243 ITR 284 (Ker) : 2000 TaxPub(DT) 968 (Ker-HC) and CIT v. Bharat Petroleum Corporation Ltd. (2001) 252 ITR 43 : 2001 TaxPub(DT) 1242 (Bom-HC).
FAVOUR : In assessee's favour
A.Y. :
INCOME TAX ACT, 1961
Section 80M
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