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TMI Blog1991 (3) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... hether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that section 34 of the Payment of Bonus Act, 1965, would not apply to the memorandum of settlement dated 3rd November, 1980, and 24th September, 1983, under which ex gratia payment was made by the assessee-company to its employees ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the payment made by the assessee to its workmen as per memorandum of settlement was ex gratia payment, not coming under the purview of the Payment of Bonus Act, 1965, and would be allowable as a deduction under section 37 of the Income-tax Act, 1961 ? " Shortly stated, the facts are that the assessee is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary for us to consider the settlements which have been arrived at to find out whether the payment is additional wages or in fact bonus. The first agreement relevant for the assessment year 1981-82 is as follows : "Terms of settlement. In view of the assurance given by the workmen that they will maintain harmonious industrial relations with the management and to promote industrial peace for smooth working at the tea estate, it has been agreed between the management and the workers that the workers shall be paid an ex gratia at 8.33 per cent. worked out on the basis of wages earned by the workers during the calendar year 1979. Payment shall be made in the calendar year 1980 on or before November 30, 1980. Workers have also assured the mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------------------------------------------------------------- Group Rate of bonus(%) Ad hoc Total (%) ex gratia (%) ------------------------------------------------------------------------------------------------------------------------------------------------- A 8.33 6.42 14.75 B 8.33 4.17 12.50 C 8.33 3.17 11.50 D 8.33 1.67 10.00 E 8.33 1.17 9.50 F 8.33 0.17 8.50 ----------------------------------------------------------------------------------------------------------------------------------------------- The names of the tea estates falling tinder each group are shown in annexure B. (iii) In view of their acute financial distress and the various operational constraints under which they have to function, the tea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been arrived at, the first one between the assessee and its employees and the second one between the industry and the workmen of the tea industry. The payment which has been agreed to be made in this case is in addition to the statutory bonus and not in the nature of profit-sharing bonus. Mere use of the expression "bonus" will not render it a bonus if it is otherwise clear that what is paid is not bonus but incentive wages. The Payment of Bonus Act does not prevent the payment of additional wages to the employees. The Tribunal has come to a finding on an interpretation of the agreement that, in this case, the payment was not made by way of bonus. In our view, the employer has to make such payment ex gratia or otherwise in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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