Shri Ram Piston And Rings Ltd. vs Cit on 17 July, 2007
15. As regards Ground No.5 regarding loyalty
rewards, brief facts are that the company had made a
provision of Rs.86,25,630 for loyalty rewards payable to
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its employees. The A.O. proceeded to disallow the same
under section 43B of the I.T. Act to an extent of
Rs.3,00,538 after considering that Rs.83,25,920 was
actually paid on or before the due date of filing the return.
It was submitted by the Ld. Counsel for the assessee that
section 43B read with section 36(1)(ii) refers to any sum
paid to an employee as statutory bonus or commission,
whereas, loyalty rewards paid by the assessee is to reward
his employee who completes certain period of work with
the company and therefore, it cannot be equated to bonus
or commission referred to in section 36(1)(ii) and
therefore, the disallowance of Rs.3,00,538 is to be deleted.
Assessee placed reliance upon the judgments of the
Hon'ble Delhi High court in the case of Shri Ram Pistons
& Rings Ltd., vs. CIT 307 ITR 363 (Del.)