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TMI Blog1987 (2) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Rs. 20,771 made under the first proviso to section 36(1) (ii) of the Income-tax Act, 1961 ('the Act') on account of production incentive paid to employees. On17-7-1978, the assessee formulated, what has been christened as. 'Production Incentive Scheme'. The assessee's previous year is the financial year and the books of account are maintained on mercantile system of accounting. The assessee-company under this scheme paid Rs. 20,771 to the factory workers on the basis of the production targets achieved by them. During the assessment proceedings, the IAC (assessment) took it to be production incentive bonus and finding that it was in excess of the limit of 20 per cent which according to him was the ceiling laid down in the first provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -company is manufacturer of picture tubes. It was contended that the factotum of payment is not in dispute, the purpose of payment for the business is not doubted and the disallowance is merely because it had been alleged that production incentive is bonus, which is incorrect. Therefore, there is no case for an interference in the order of the learned Commissioner (Appeals). He relied upon the judgment of the Supreme Court in the case of Titaghur Paper Mills Co. Ltd. v. Their workmen [1959] Suppl. 2 SCR 1012 particularly p. 1019. 4. The revenue had contended that if the payment is hit by the first proviso to section 36(1) (ii) as held by the IAC (Assessment) then the payment cannot be considered under section 37 of the Act. Rebutting this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y sense but is covered by the provisions of the first proviso the section 36(1) (ii). The learned commissioner (appeals) gave a correct finding that such production incentive payments were not in the nature of bonus payable under the provisions of the Payment of Bonus Act. If that is clear then the issue becomes very simple. The assessee has actually paid the production incentives on actual extra production by the workmen and in view of the Hon'ble Supreme Court judgment referred to, it has to be considered as additional wages for additional production. The amount is, therefore, clearly admissible. 7. The argument of the revenue that if the provisions of section 36(1) are attracted then section 37 cannot be invoked is, therefore, not rele ..... X X X X Extracts X X X X X X X X Extracts X X X X
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