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2001 (10) TMI 36 - HC - Income Tax

Issues Involved: Condonation of delay in filing appeal, Allowability of additional bonus as expenditure under section 37 of the Income-tax Act.

Condonation of Delay: The Tribunal rejected the appeal on the ground of limitation but also considered the merits of the case, indicating a lack of conviction in rejecting the appeal based on delay. The delay of about 60 days was due to the death of the senior assistant in charge of income-tax work and the subsequent demise of the authorised representative's mother. The circumstances were deemed sufficient to condone the delay, especially since the Tribunal has the power to do so.

Allowability of Additional Bonus: The assessee, a textile mill, paid an additional bonus of three per cent under a settlement to ensure industrial peace and maintain production. This payment was considered to have a nexus with the business interest of the assessee and was deemed an allowable expenditure under section 37 of the Income-tax Act. Such payments to workmen for maintaining production and increasing productivity are considered wholly and exclusively for the purpose of the business if made under agreements permitted by law and not solely to avoid tax.

Court's Decision: The High Court held that the Tribunal erred in not condoning the delay in filing the appeal and in concluding that the additional bonus could not be claimed as expenditure under section 37 of the Act. The Court emphasized that matters of condonation of delay are discretionary, but in this case, the Tribunal's actions indicated that it treated the appeal as properly before it. Therefore, the Court ruled in favor of the assessee on both issues, finding in favor of condoning the delay and allowing the additional bonus as a legitimate expenditure under section 37 of the Income-tax Act.

 

 

 

 

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