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Issues: The judgment involves the following issues: (i) Whether bonus paid as per a conciliation conference settlement falls under the Payment of Bonus Act for income tax deduction, and (ii) Whether commission payment for exports to Russia qualifies for weighted deduction under section 35B of the Income-tax Act.
Issue (i - Bonus Payment): The respondent, an assessee to income tax, claimed a deduction of Rs. 6,64,443 as bonus for the assessment year 1978-79. The assessing authority disallowed the excess bonus amount not compliant with the Payment of Bonus Act. The Commissioner of Income-tax (Appeals) allowed a deduction of Rs. 3,54,790 for bonus paid. However, the Tribunal ruled that the bonus payment was a result of a conciliation conference settlement, not governed by the Payment of Bonus Act. The High Court directed the Tribunal to reassess the claim considering the guidelines set in CIT v. Alikunju (P.), Nazir (M. A.) Cashew Industries [1987] 166 ITR 611. Issue (ii - Commission Payment): The assessee claimed weighted deduction under section 35B for a commission payment of Rs. 1,07,599 made for exports to Russia. The Income-tax Officer initially denied the claim stating the payment was made in India. The Tribunal, following precedent, allowed the weighted deduction. The High Court directed the Tribunal to reevaluate the matter in light of previous decisions like CIT v. Aluminium Industries Ltd. [1990] 182 ITR 172 (Ker) and other relevant cases. Separate Judgment: The judgment was delivered by K. S. PARIPOORNAN J. The High Court directed the Income-tax Appellate Tribunal to review both issues afresh based on the legal guidelines provided, declining to provide a direct answer to the questions posed.
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