9911796707
TMI Blog2001 (3) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... tter in deleting the addition of Rs. 1,29,43,042? 2. Whether, on the facts and in the circumstances of the case and in view of the first proviso of clause (ii) of sub-section (1) of section 36 of the Income-tax Act, 1961, as existed during the relevant assessment year, the Tribunal has not erred in law and in facts in upholding the Commissioner of Income-tax (Appeals) order deleting disallowances of Rs. 26,29,657 on account of ex gratia payment paid in excess of the Payment of Bonus Act, 1965, on the ground that the payment has been made wholly and exclusively for the purpose of the business? 3. Whether, on the facts and in the circumstances of the case, the Tribunal did not err in admitting the ground regarding deduction of surtax in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Payment of Bonus Act, 1965, on the ground that the payment has been made wholly and exclusively for the purpose of the business?" Before we answer the reference, the basic facts strictly for the purpose of answering the reference may be noted. The assessee, Assam Frontier Tea Ltd. is a company registered under the Companies Act. For the assessment year ending March 31, 1984, the company has declared 14.95 per cent. bonus under the Payment of Bonus Act and 5.05 per cent. as ex gratia payment to workers and staff eligible for payment amounting to Rs. 26,29,657 and on appeal by the Revenue the Deputy Commissioner disallowed the deduction of Rs. 26,29,657, On appeal, the Commissioner of Income-tax (Appeals) allowed the deduction of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uy industrial peace and to save the industries from strike or lock out. This has also been done keeping in view the customary bonus in consonance with the practice followed by commercial and business establishments. Admittedly, the ex gratia payment made by the assessee-company to the labourers and staff for the period under reference does not come within the mischief of the Payment of Bonus Act, 1965. Section 37 of the Income-tax Act, allowed deduction of expenses wholly and exclusively for the purpose of the business or profession other than the expenditure prescribed in sections 30 to 36 of the Act. We have already held that the payment of the ex gratia payment made by the assessee-company to its labourers and staff with a view to buy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and exclusively for the purposes of business and was, therefore, allowable as a business deduction under section 36(1)(ii) of the Income-tax Act, 1961. (b) In CIT v. D. Mohamed Ismail [1997] 227 ITR 211, the Madras High Court had held that the customary bonus paid to the employees as a matter of practice satisfied the conditions prescribed under the second proviso to section 36(1)(ii) of the Income-tax Act, 1961. (c) In CIT v. Thiagarajar Mills Ltd. [1999] 237 ITR 857, the Madras High Court was considering whether the payment of incentive bonus in excess of the bonus payable under the Payment of Bonus Act is an allowable deduction notwithstanding section 36(1)(ii) and held that it is allowable under the provisions of section 37 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
