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Issues Involved:
1. Quantum of bonus payable to workmen. 2. Deduction for income tax in calculating available surplus. 3. Remuneration for partners. 4. Entitlement to traditional or customary bonus. Issue-wise Detailed Analysis: 1. Quantum of Bonus Payable to Workmen: The main point of contention was the quantum of bonus payable to workmen for the year ended October 31, 1958. The Tribunal had to decide whether the claim should be restricted to profit-sharing bonus, customary bonus, or based on implied terms of the contract. The Tribunal concluded that the workmen were entitled to claim bonus on three alternative bases: profit-sharing bonus, bonus as an implied term of service, and customary or traditional bonus on the occasion of Dewali. The Tribunal awarded a bonus equivalent to 1/4th of the total basic wages earned by the workmen, less the amount of bonus equivalent to one month's wages already paid. 2. Deduction for Income Tax in Calculating Available Surplus: The Tribunal had to determine the available surplus by granting certain deductions from the gross profits, including the deduction for income tax. The appellants argued that the deduction should be on a notional basis similar to a registered company, while the respondents contended it should be the actual tax payable by the firm. The Tribunal decided that the income tax deduction should be based on the tax payable by the firm, which amounted to a little over 5% of the gross profits. The Supreme Court upheld this approach, rejecting the appellants' suggestion to equate the firm to a company for tax deduction purposes. 3. Remuneration for Partners: The Tribunal fixed a lump sum of Rs. 20,000 as remuneration for the six partners, a figure deemed conjectural. The appellants argued for a higher amount, suggesting Rs. 48,000 as reasonable. The Supreme Court acknowledged the inadequacy of the Tribunal's figure but chose not to determine a new figure, emphasizing that its role was not to function as a regular Court of Appeal from the Tribunal but to ensure the proper administration of law. 4. Entitlement to Traditional or Customary Bonus: The Tribunal found that the workmen had established their claim for traditional or customary bonus at a uniform rate of one month's basic wages plus dearness allowance, despite the appellants' contention that such a bonus should be paid even in years of loss. The Supreme Court upheld the Tribunal's finding, stating that the payment of customary bonus does not necessarily require proof of payment in years of loss. The Court emphasized that the conditions for establishing customary bonus are based on substance rather than form and that the payment of such a bonus is often associated with special occasions like festivals. Separate Judgment by Ayyangar, J.: Ayyangar, J., disagreed with the majority on the quantum of profit-bonus and the entitlement to customary bonus. He argued that the deduction for income tax should include both the tax payable by the individual partners and the "registered firm tax," amounting to Rs. 60,000. He also suggested that the remuneration for partners should be increased to Rs. 40,000. Based on these revised figures, he concluded that the bonus should be reduced to two months' basic wages instead of three. Regarding customary bonus, Ayyangar, J., emphasized that payment in a year of loss is a necessary condition for establishing a claim to customary bonus, which was not satisfied in this case. Conclusion: The Supreme Court, by majority, dismissed the appeal with costs, upholding the Tribunal's award of bonus and the entitlement to customary bonus. Ayyangar, J., dissented, proposing a reduction in the bonus and rejecting the claim for customary bonus.
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