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TMI Blog1980 (10) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... the accounting period relevant to the assessment year under appeal the assessee paid Silver Jubilee Bonus of Rs. 26,448 in addition to the regular bonus payable under the Bonus Act and this was treated as an ex gratia payment though paid on a special occasion but the claim by the assessee as deduction out of total income has been denied by the ITO with the reasoning that the payment was made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as inserted by the Payment of Bonus(Amendment) Act, 1976 was applicable and consequently, the deduction in respect of bonus paid to an employee employed in a factory or other establishment to which the provisions of the Payment of Bonus Act, 1965 apply should not exceed the amount of bonus payable under that Act." 5. The law which has been relied upon by the CIT (A) in the impugned order viz., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f it is de hors the Bonus Act as is the case with the assessee in appeal before us who has made payment to its employees as ex gratia payment on Silver Jubilee of the assessee firm. In Sasson J. David Co. (Pvt) Ltd. vs. CIT, Bombay (1979) 10 CTR (SC) 383 : 118 ITR 261, the Supreme Court observed at page 271 as under: "It is too late in the day now, whatever may have been the position about two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1962) 44 ITR 551 (SC), viz., that the sum of money had been expended on the ground of commercial expediency and in order indirectly to facilitate the carrying on of the business. We are of the view that the three tests laid down by this Court in the above case, viz., (1) that the payment should have been made as a matter of practice which affected the quantum of salary; (ii) there was an expectat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said expenditure is expended wholly and exclusively for the purposes of the assessee s business, hence merits to be allowed, as deduction, in computing the total income of the assessee for the assessment year under appeal as income under the head profit and gains of business . We order accordingly. 7. In the result, the appeal by the assessee succeeds and is allowed. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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