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TMI Blog1984 (8) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of Rs. 8,02,048 being provision for bonus as computed under the Payment of Bonus Act and the additional payment due to the assessee s employees under an agreement. The peculiar facts relating to the assessee s claim and its rejection by the Departmental authorities may be stated. The assessee, it appears, upto the year under appeal, namely the calendar year 1979 as the previous year for the asst. yr. 1980-81, has been claiming both in the accounts and in the income tax assessment as a deduction of the bonus payment actually made during the concerned previous year and such claim was allowed in the income tax assessment. On that basis the assessee had claimed deduction of Payment in accordance with the provision of payment of Bonus Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r changing his method of accounting. 3. In the appeal before us, the assessee s ld. Representative made two submissions against the disallowance. In the first place it was claimed that there has been no change in the method of accounting adopted by the assessee. In was contended that the method of accounting adopted by the assessee for determining its income is the mercantile system and irrespective of whether the assessee had made a provision in the account for a liability which had accrued under law according to the mercantile system or not, the assessee is entitled to the claim. The second submission was that even assuming that there was change, there is no lega bar for making a change if it is bona fide. 4. With regard to the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the calendar year 1978 is concerned, the objection is that since it is in the nature of bonus nothing can be allowed beyond the maximum permissible under the payment of Bonus Act which is already allowed in the sum of Rs. 5,28,048. We do not see any force or merits in this contention. Undisputedly the payment has been required to be made under an agreement and settlement under the Industrial Disputes Act which is binding on the assessee under a statutory obligation. The payment cannot be, therefore, regarded as a payment under the Payment of Bonus Act, but one governed by the settlement under the Industrial Disputes Act. It is, therefore, not in the nature of bonus, but a payment necessitated by compulsion under the statute and incurred on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to do so and its conduct cannot be faulted unless the change is found to be not bona fide or to take any tax advantage which is not its due. When the assessee changes the basis of claiming the bonus hitherto adopted to a more reasonable one in keeping with the system adopted, there is bound to be in the year of change a claim for deduction of more than one amount in respect of the liability, which is justifiable. In respect of the liability relating to the past year, which could not be allowed in those years on account of the system hitherto adopted, the assessee is entitled to deduction on the basis of payment because otherwise the assessee will get no opportunity to avail of the deduction which it is justly entitled to. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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