Held that once payment made to employees were not exempt under section 10(10C) of the Act, they partook of the nature of expenses incurred for the purpose of business and thus, the assessee could claim deduction under section 37(1) of the Act. However, the Assessing Officer was to verify whether the employees did not avail of the benefit of exemption under section 10(10C) of the Act. If the Assessing Officer found that the employees had not availed of the benefit of exemption under section 10(10C) of the Act, he was to allow the deduction as claimed by the assessee towards compensation paid to employees under section 37(1) of the Act. (AY.2008-09 to 2010-11)