RAJESH BALIA,J. - (1.) THESE two appeals under Section 260A for asst. yrs. 1989 -90 and 1991 -92 and IT Ref. No. 58 of 1999 relating to the asst. yr. 1990 -91 relates to the same controversy about the claim of the assessee to deduction of certain amount claimed by it as outright expenses incurred by it for the welfare of its employees under an obligation arising from the agreements between the assessee and its employees which were in operation during the relevant period and obligating the assessee to incur such expenses at the pains of punishment for non -compliance thereof under the Industrial Disputes Act.
(2.) HOWEVER , the audit report submitted by the auditors of the company shows that there was auditors' note that the expenses are not eligible for deduction for computing the total taxable income of the assessee under Section 40A(9) of the IT Act, 1961. The said provision reads as under: '40A(9) No deduction shall be allowed in respect of any sum paid by the assessee as an employer towards the setting up or formation of, or as contribution to, any fund, trust, company, AOP, BOI, society registered under the Societies Registration Act, 1860 (21 of 1860), or other institution for any purpose, except where such sum is so paid, for the purposes and to the extent provided by or under Clause (iv) or Clause (v) of Sub -section (1) of Section 36, or as required by or under any other law for the time being in force.' While the AO as well as the CIT (A) had not sustained the claim of the assessee, the Tribunal has allowed the claim of the assessee to deduction of said amounts as allowable expenditure laid down wholly and exclusively for the purpose of its business under Section 37 of the Act of 1961.
(3.) THE expenses in question relate to amount paid towards activities carried under the welfare fund at the mine sites; to the staff club run by the members of the staff; to the Central Public School for securing admission and educational facilities for its employees and to subsidise the canteen.;