2001 (7) TMI 35

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....ax Act?" The assessee is a banking company within the meaning of the Banking Regulation Act and is incorporated under the laws of the United Kingdom. III the return filed on December 31, 1976, the assessee has declared the income of Rs.12,25,99,190. The assessment year involved is 1976-77. During the course of the assessment, the Assessing Officer noticed that the assessee has paid excess amount to the employees in terms of section 40A(5). The assessee has in fact claimed the proportionate expenses deductible under section 20(1)(i) of the Act in computing the income under the head "interest on securities" for the purpose of disallowance under section 40A(5). That has been rejected and the Assessing Officer has added back that excess amoun....

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....ncluded in that case there will be an excess payment from the limit prescribed for the purpose of disallowance, that has to be disallowed. The provisions of section 40A(5) start with a non obstante clause which contemplates that the provision of section 40A(5) shall have effect notwithstanding anything to the contrary contained in any other provision of this Act, relating to the computation of income under the head "Profits and gains of business or profession". Sub-section (5) of section 40A provides that where the assessee incurs an expenditure which results directly or indirectly in the payment of any salary to an employee or incurs an expenditure which results directly or indirectly in the provision of any perquisite to an employee or....