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TMI Blog1973 (7) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T.A. No. 405 of 1970-71. The Tribunal has referred the following question of law for our opinion: "Whether, on the facts and in the circumstances of the case and keeping in view the provisions of the Payment of Bonus Act, 1965, the assessee is entitled to claim deduction of bonus of Rs. 6,200 relating to the financial year 1964-65 for the assessment year 1965-66?" The assessee in this case is not represented. M/s. Jai Bajrang Nail Industries' Prop. Net Ram Tirath Ram Moga (hereinafter referred to as the assessee) is an individual and manufactures nails and certain domestic goods. The reference pertains to the assessment year 1965-66 for which the financial year is 1964-65. In the profit and loss account of this year, the assessee made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 'accounting year' and the assessee's accounting period now under consideration is a period to which the provisions of the Bonus Act apply in view of the definition in section 2(1)(iii)(a). Thus, it is clear that the provisions of the Bonus Act apply to this accounting period. The bonus for the accounting period, under the Bonus Act, had to be computed with reference to the 'available surplus' as defined in section 2(4) which was 60% of the 'available surplus' as defined in section 2(6) read with section 5. The available surplus is the figure arrived at on deducting from gross profits the amount mentioned in section 6. The Second Schedule to the Payment of Bonus Act prescribes the methods of computing the gross profit. This has to be with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income-tax v. Mysore Electrical Industries Ltd. In the present case, the bonus payable related to the accounting period under consideration and the assessee, therefore, sought for the deduction of bonus as computed in accordance with the provisions of the Payment of Bonus Act, 1965, which covered the accounting period. As the assessee maintains its accounts on the mercantile system, we are of the view that the amount of Rs. 6,200 is, on the facts set out by us, an admissible deduction for this assessment year. We allow the same as a deduction." Thereafter, the Additional Commissioner of Income-tax filed an application and, as earlier observed, on that application the question reproduced above has been referred to this court for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to deduct this amount, but the stand taken is that it has to be accounted for in the assessment year of 1966-67 and not the year in question, which, to our mind, is an untenable stand. The assessee under the legislation is required to pay the bonus for the year in question and he is entitled to make adjustment in his accounts, which would relate back to the last date of the accounting period. The effect of the enforcement of the Bonus Act would be that the amount of bonus sought to be accounted for subsequently would be deemed to have been included for all intents and purposes in the accounting year for which it is required to be paid by the statute, and it would be deemed to be part of the expenditure for that accounting year. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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