2002 (8) TMI 25

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....(1) of the Income-tax Act, 1961, the Tribunal has referred the following question for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that a sum of Rs. 19,77,436 was for business, particularly in the light of the letter of the union read with the report of the directors ?" The assessee-company claimed deduction of ex-gratia payment....

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....f section 37 of the Income-tax Act, 1961, provides that the expenses which are not covered by sections 30 to 36, and if they are wholly and exclusively for the purpose of the business, that can be allowed under section 37 of the Act. While making the payment to the workers, the relevant facts, which have been taken into account are reproduced hereinbelow for ready reference : "It is a matter of....

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....s for the purpose of the business. It is also pertinent to note that the assessee-corporation is a public undertaking of the State. The payment has not been made to any friend or relation of the directors. The payment has been made to the workers with the commercial expediency. We, therefore, agree with the view of the Tribunal that the payment has been made with the object to run the business.....