2020 (12) TMI 967

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....allowance of provision for retention bonus. b) Addition of interest income. 3. The assessee is engaged in the business of providing IT enabled services in the form of back office operations in the area of loan servicing. 4. The first issue relates to disallowance of provision for retention bonus. The A.O. noticed that the assessee has claimed a sum of Rs. 1,14,18,059/- as expenditure towards Provision for retention bonus. The assessee explained that it relates to retention bonus payable to its employees who have already rendered services for the year under consideration. The A.O. took the view that the provision so created is an unascertained liability and further the assessee has not paid the retention bonus before the due date for fil....

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....for filing return of income. Accordingly, the Ld. CIT(A) directed the A.O. to restrict the disallowance to Rs. 97,05,992/-. 7. The Ld. A.R. contended that the provision for retention bonus is allowable as deduction u/s. 37(1) of the Act. He further submitted that the Ld. CIT(A) was not justified in applying the provisions of section 43B of the Act to this claim of the assessee. On the contrary, the Ld. D.R. submitted that the provision for bonus is covered by the provisions of section 43B of the Act and hence the Ld. CIT(A) was justified in directing the A.O. to restrict the disallowance to Rs. 97,05,992/-. 8. We heard the parties on this issue and perused the record. A perusal of provision of section 43B of the Act would show that clause....