9911796707
TMI Blog1987 (4) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... 9th Jan., 1982 14. In this appeal by the Revenue, the first objection is that the CIT(A) erred in deleting the disallowance of Rs. 8,21,755 out the payment of bonus to workers rightly made by the ITO. The IAC(Asst.) noted that, in the assessment order for the asst. yr. 1980-81, there was a detailed discussion as to how the payments made by the assessee, which were in the nature of bonus (described variously as production bonus, ex gratia payment, attendance incentive bonus) had to be within the limits prescribed by s. 36(1)(ii) of the Act. Adopting the reasons recorded there, the IAC (Asst.) held that he would allow as deduction only bonus of 20 per cent being the maximum permissible under the Payment of Bonus Act. The balance of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s kinds, viz. (a) payment to employees retrenched/ retired under the Industrial Disputes Act, (b) payments to loyal workers during the strike period, (c) production bonus and (d) overtime payments. The Tribunal was of the view that the above kind of payments did not fall to be described as bonus within the meaning of Payment of Bonus Act under s. 36(1)(ii) of the IT Act, 1961. That such payments were allowable as revenue expenditure incurred for the purpose of business expediency. 18. Attention was then invited to page 23 of the paper book. This is also an order of the Tribunal in this case for the asst. yr. 1980-81 (ITA No. 2633/Del/84 dt. 12th Dec., 1986). For that year, the Revenue came up with a similar objection relating to the disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry of Rs. 9,79,073 shown as due from Auto Pins (I) (Regd.), the old firm. He then looked into the capital gains of the partners of the firm. He noted that on31st Dec., 1979, the partners were credited with certain amounts and the assessee, in explanation, filed the following extract: "As on 31st Dec., 1979 To partners capital a/c (As per list) 5,28, 527.39 . By partners capital a/cs . 5,46,175.52 To advance (as per list) 11,48,020.00 . By sundry creditors . 2,41,298.01 To balance . 8,89,073.86 16,76,547.39 16,76,547.39 As on 30th Sept., 1980 1st Jan., 1980to Balance 8,89,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the extent of Rs. 11,48,020. He asked the assessee to explain why Rs. 2,41,298 should not be treated as the assessee s income under s. 41(1). Presumably, he was of the view that there was a remission or cessation of the old liabilities to the extent in favour of the assessee firm and hence the same should be taxed. The assessee explained that the amount in question had not been written off in the book and that it had merely been transferred to the old firm s account. It was also pointed out that the assessee had not derived any benefit in any past assessment with regard to such liabilities so as to bring in s. 41(1). The IAC did not find these submissions acceptable. He brought to tax the said amount for the following reasons briefly: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese loans were friendly loans given by the partners, some had become otherwise irrecoverable. The liabilities to the extent of Rs. 2,41,298 which were of a similar nature, were also transferred to this account. (b) The net result of the consolidating of these accounts into one account resulted in a balance of Rs. 8,89,073, shown in the balance-sheet as noted above. Similar adjustment on account of current accounts of the partners was made in the second period (after31st Dec., 1979) and this resulted in the balances outstanding in these accounts going to Rs. 9,79,073 as on 30th Sept., 1980. (c) What has been done here was merely aggregation of certain accounts under one consolidated head i.e. the account with a balance of Rs. 8,89,073 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lidation of a certain account by itself did not change the character or obliterated the existence of the accounts. (c) There is not evidence at all to hold that any liability has ceased to exist, even the Ltd. Company is carrying forward this amount in its books, if ultimately it may turn out to be a fictitious asset in its hands. Notwithstanding this factually, the case does not fall under s. 41(1). The Revenue is in further appeal. 24. We have heard the parties. While the Departmental Representative supported the order of the IAC (Asst.), Shri Relan relied upon the CIT(A) s order. He also drew our attention to the fact that in the balances-sheet of the Ltd. Co. as on 30th Sept., 1981, the advances recoverable are shown at a total of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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