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TMI Blog2016 (12) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... nt by the assessee. In the entirety of the above said facts and circumstances, there is no merit in applying the provisions of section 43B of the Act which are strictly applicable to the payment of bonus. The nature of payment made by the assessee to the employees is not bonus and is not covered under the Bonus Act and hence, no merit in disallowance of expenditure claimed by the assessee. Accordingly, the Assessing Officer is directed to allow the claim of assessee in entirety. - Decided in favour of assessee - ITA No.150/PN/2016 - - - Dated:- 18-11-2016 - MS. SUSHMA CHOWLA, JM For The Appellant by : None (written submissions) For The Respondent : Smt. Sumitra Banerji ORDER PER SUSHMA CHOWLA, JM: This appeal fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the year under consideration, the assessee had furnished the return of income declaring total income of ₹ 28,54,280/-. The case of assessee was taken up for scrutiny. The assessee had debited expenditure under the head Bonus amounting to ₹ 9,40,000/-. The said expenditure was to the family members, who were working in the proprietary concern of assessee. During the course of assessment proceedings, the assessee was asked to furnish the details regarding payment of bonus. In response, the assessee pointed out that the provisions of section 43B of the Act were not applicable to the bonus account. He later pointed out that the said bonus amount was credited to the employees account, which in turn, means the same was paid to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal against the order of CIT(A) and has filed written submissions. As per said submissions, the assessee pointed out that the bonus of ₹ 9,40,000/- was paid by debiting Profit Loss Account and by crediting respective Current account maintained for the employees. The assessee stressed that the amount of bonus was credited to the accounts of employees within the year itself and once the said amount is credited to their accounts, the assessee has no control over the same. He stressed that there is no provision of bonus payable and also there is no stipulation in section 43B of the Act that actual payment should be made in cash only. Further, the assessee relied on confirmations filed of the employees, who in turn, had disclosed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tmental Representative for the Revenue, the issue which arises for adjudication in the present appeal is the allowability of bonus of ₹ 9,40,000/-. The assessee was carrying on his business in sole proprietary concern and for the year under consideration had employed his family members in assisting his business. The assessee had paid salary to the tune of ₹ 9,90,000/- to five employees, in addition bonus of ₹ 9,40,000/- was claimed to have been paid by the assessee by crediting respective accounts of employees. The total remuneration i.e. salary plus bonus paid by the assessee to the said employees was ₹ 19,30,000/-. The amount had been credited to the respective accounts of employees and the assessee claims that onc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum payable by the assessee as interest on any loan or borrowing from any public financial institution or a State financial corporation or a State industrial investment corporation, in accordance with the terms and conditions of the agreement governing such loan or borrowing, or (e) any sum payable by the assessee as interest on any loan or advances from a scheduled bank in accordance with the terms and conditions of the agreement governing such loan or advances, or (f) any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee, shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but in actual fact, the amount paid was by way of an incentive to the services rendered by the said employees, who admittedly, were his family members and were working in his proprietary concern. Although the term used by the assessee while debiting the Profit Loss Account is bonus but the nature of payment was not bonus as in the first instance, the assessee claims that the provisions of Bonus Act are not applicable where total number of employees employed by him were less than 20. There is merit in the plea of assessee in this regard. Merely because the term used by the assessee is bonus , then the same does not partake the nature of bonus. In this regard, it is necessary to look into the remuneration paid by the assessee on a sala ..... X X X X Extracts X X X X X X X X Extracts X X X X
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