1957 (9) TMI 30

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ar 1952-53 is the calendar year 1951. There was a dispute in regard to the bonus payable to the workers for the year 1951 and the matter was referred to conciliation. The conciliation board gave its award in June, 1952, and a bonus was actually distributed in December, 1952. The assessee company maintains its accounts on a mercantile basis and no entry was made in the account books of the company for the year 1951 making a provision for payment of bonus. However, in their return, the company claimed to deduct from the profits the bonus directed to be paid by the conciliation board by its award as an allowable expense which had not been charged in arriving at the figure of profits. The conten-tion of the Department is that this amount, which .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... Now, in section 10(2)(x), what is allowable as a deduction is "any sum paid to an employee as bonus". By itself this contemplates actual payment; but section 10(5) defines the word "paid" which appears in sub-section (2) as meaning "actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are computed under this section". Therefore, an actual payment is not necessary for the purpose of this deduction; it is sufficient if the liability to bonus is incurred according to the method of accounting upon the basis of which the profits or gains are computed. Now, considering that the profits or gains are computed on the mercantile basis, the amount of bonus for the year 1951 would properly be trea .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... nse. Obviously, again, it has not been charged in arriving at the figure of profits according to the profit and loss account. Therefore, it was an amount that could legitimately be shown as a deduction under this part of the statutory form of return, and the assessee were, in our opinion, entitled to have this deduction or allowance. There is no dispute, and there can be none, as to the reasonableness of the quantum which might have been material if there had been no conciliation and an award in regard to the bonus. The only dispute relates to the year in which the amount should be allowed. In our opinion, the amount was rightly allowable in the assessment year 1952-53 and the Tribunal came to the correct conclusion. Our answer to the i .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X