Case Law Details
Pr. CIT Vs M/s. State Bank of India (Bombay High Court)
Conclusion:
Where employer had incurred genuine expenditure for the welfare and the benefit of the employees, contributions to unapproved and unrecognized funds had to be allowed as a deduction.
Held:
Assessee claimed deduction of expenditure of Rs.50 lakhs towards contribution to a fund created for the health care of the retired employees. Revenue argued that such fund not being one recognized under Section 36(1)(iv) or (v), claim of expenditure was hit by the provisions of Section 40A(9). It was held the very purpose of insertion of sub-section (9) of section 40A was to restrict the claim of expenditure by the employers towards contribution to funds, trust, association of persons etc. which was wholly discretionary and did not impose any restriction or condition for expanding such funds which had possibility of misdirecting or misuse of such funds after the employer claimed benefit of deduction thereof. In plain terms, this provision was not meant to hit genuine expenditure by an employer for the welfare and the benefit of the employees. Thus, assessee was entitled for deduction.
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