The payments were envisaged under a Memorandum of Settlement dated 31st March, 1986 between the Respondent-Assessee and the trade union, namely, TELCO-Workers’ Union, Jamshedpur (“Workmen’s Union”) of the workers employed by the Respondent-Assessee. The Hon. Court held that Section 40A(9) has no application to the facts of the case. The Tribunal was justified in law in deleting the disallowance made by the Assessing Officer. Further the payments made in the facts of this case were not payments required to be made under the Industrial Disputes Act or payment required by or under any other law, but the same is irrelevant for the matter at hand since Section 40A(9) was not at all attracted. Unless it was attracted, there was no necessity to rely on the exception in that section in relation to payments required to be made or under any law. (AY.1987-88 and 1988-89)
CIT v. Tata Engineering & Locomotive Company Ltd.[2024] 165 taxmann.com 227 (Bom)(HC)
S. 40A(9) : Expenses or payments not deductible-Bonus to employees-Business expenditure-Contribution to employees welfare trust-Community services-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 as business expenditure. [S. 37(1), 30 to 36]