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| The Tax Publishers2019 TaxPub(DT) 7834 (Ranchi-Trib) INCOME TAX ACT, 1961
Section 37(1)
Assessee company being located in remote area and naxal affected area where there are no recreational facilities in and around the nearby locality. Expenses in question were incurred by assessee in order to maintain cordial and harmonious industrial relations amongst workers for better and smooth running of business without direct benefit to any individual employee or any specific group of employees and ad hoc disallowance made by AO without pointing out any defect or identifying any expenses for non-business purpose could not be sustained.
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Business expenditure - Provision of recreational facilities to staff in remote area - Ad hoc disallowance @ 10% without pointing out any defect or identifying any expense for non-business purpose -
Assessee claimed deduction of expenses incurred on provision of tea, snacks, canteen subsidy and stitching of official uniform for officer and staff. AO disallowed 10% of the expenses alleging personal element therein.Held: Assessee company being located in remote area and naxal affected area where there are no recreational facilities in and around the nearby locality. Expenses in question were incurred by assessee in order to maintain cordial and harmonious industrial relations amongst workers for better and smooth running of business without direct benefit to any individual employee or any specific group of employees and ad hoc disallowance made by AO without pointing out any defect or identifying any expense for non-business purpose could not be sustained.
REFERRED :
FAVOUR : In assesse's favour.
A.Y. : 2006-07
INCOME TAX ACT, 1961
Section 37(1)
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