Revenue expenditure for employee welfare and failure to prove contract payment barred TDS disallowance, with no substantial question of law.

Educational facilities provided for employees' wards under a National Coal Wage Agreement were treated as revenue expenditure because the obligation was legally enforceable under section 18 of the Industrial Disputes Act, the spending had been accepted in earlier years, and the assessee's objects did not exclude such welfare outlay. The Revenue's challenge failed. Disallowance under section 40(a)(ia) for alleged contract payments without TDS deduction was also rejected because the record did not establish that the payment was actually made or that the statutory precondition for invoking the provision was satisfied. The concurrent factual findings disclosed no substantial question of law, so appellate interference was unwarranted.

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Issues: (i) Whether donation expenditure incurred for educational institutions as part of corporate social responsibility and employee welfare obligations was allowable as revenue expenditure. (ii) Whether disallowance under section 40(a)(ia) for alleged contract payments without TDS deduction was justified.

Issue (i): Whether donation expenditure incurred for educational institutions as part of corporate social responsibility and employee welfare obligations was allowable as revenue expenditure.

Analysis: The provision for educational facilities was found to be made in discharge of an obligation under the National Coal Wage Agreement, which was treated as legally enforceable under section 18 of the Industrial Disputes Act. The expenditure had also been accepted by the Department in earlier years, and the record did not show that the assessee's objects excluded such spending. The facilities were being provided for the wards of employees stationed away from towns, and the arrangement was directed to meet a practical welfare need.

Conclusion: The issue was decided against the Revenue and in favour of the assessee.

Issue (ii): Whether disallowance under section 40(a)(ia) for alleged contract payments without TDS deduction was justified.

Analysis: The assessee's case was that no such payment had been made and that the books of account did not reflect any payment to the stated recipient. The assessment record also showed a mismatch between the departmental action and the assessee's books. In that situation, the precondition for invoking section 40(a)(ia) was not established on the material before the Court.

Conclusion: The issue was decided against the Revenue and in favour of the assessee.

Final Conclusion: No substantial question of law arose from the concurrent findings, and the appeal was rejected.

Ratio Decidendi: Where the findings of fact are concurrent and the record discloses no substantial question of law, and where the factual basis for invoking a disallowance provision is not established, appellate interference is not warranted.

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