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SUPREME COURT
A.M. Khanwilkar, J
Commissioner of Income Tax Bombay v. M/s. Mafatlal Gangabhai and Co. (P) Ltd.
| Table of Content |
|---|
| 1. introduction of the legal provisions regarding deductibility of employee benefits. (Para 1 , 2) |
| 2. detailed examination of section 40a and restrictions on deductible expenditure. (Para 3 , 4) |
| 3. clarification that cash payments to employees do not constitute perquisites or deductible expenses. (Para 5 , 14) |
| 4. facts surrounding the appeals, including specific cash payments made by the assessee. (Para 6 , 7 , 8) |
| 5. judicial reasoning on cash payments and their qualification under tax law. (Para 9 , 10 , 11) |
1 Leave granted in the Special Leave Petition.
2. The only question in this batch of appeal is whether the payments made in cash by an assessee to its employees are within the mischief of S.40(a) (v) and S.40A(5). Sub clause(v) was inserted in clause (a) of S.40 by the Finance Act, 1986 with effect from April 1, 1969. S.40 (a) (v) reads as follows :
"S 40. Amounts not deductible. Notwithstanding anything to the contrary in (S.30 to 38), the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession",
(a) in the case of any assessee-
(v) any expenditure which results directly or indirectly in the
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