1998 (2) TMI 19

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..... future was bonus in nature, barred by the proviso to section 36(1)(ii) of the Income Tax Act, 1961, and consequently, would not qualify for deduction under section 37 of the Act ? 2. Whether, on the facts and circumstances of the case the Tribunal was right in confirming disallowance of extra-shift depreciation ignoring the Board's circular which is binding in law on the assessing authority ?" As regards the first question it deals with the deduction under section 37 of the Income Tax Act, as regards an additional payment of bonus at the rate of 8.9% of the wages amounting to Rs. 1,71,921 the assessee, in accordance with a settlement arrived between its employees and itself under section 18(1) of the Industrial Disputes Act, 1947, pai .....

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..... ndia Viscose Ltd. v. CIT ( 1982) 135 ITR 206 . On appeal the Commissioner (Appeals) allowed the case of the entire claim of extra-shift allowance by relying on the Board's Circular No. F. 10/83/8/ITA-II, dated September 28, 1970. The Tribunal, on appeal, held that the assessee was not entitled to extra-shift allowance on the machineries in the factory. Challenging the order of the Tribunal, the assessee sought for a reference on the.two questions of law set out earlier. In so far as the first question of law is concerned, it is seen that tile additional payment was made by the assessee tinder a settlement arrived at by the assessee with its own employees. As per the settlement tinder section 18(1) of the Industrial Disputes Act, 1947, th .....

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..... idered by this court in T. C. No. 1188 of 1988, dated March 4, 1997, wherein it was held that the additional payment made pursuant to a settlement arrived under the Industrial Disputes Act in consideration of the promise given by the employees to extend their commitment and co-operation for better production in the mill would be allowable tinder section 37 of the Act. Therefore, we are of the view that the Tribunal was not correct in holding that the claim of the assessee should be decided only with reference to the proviso to section 36(1)(ii) of the Act, on the other hand, the allowability of the same should be examined with reference to the provisions of section 37 of the Act. Accordingly, we hold that the Tribunal was not correct in hol .....

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