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TMI Blog1991 (6) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... de for the purpose of the business and deductible under section 37(1) of the Income-tax Act, 1961 ? " The facts relating to this reference are that, in its books of account relating to the year of accounting ending on March 31, 1983, the assessee had made a provision in respect of the minimum bonus payable to its workers for the said year under the Payment of Bonus Act. Therefore, as a result of a bipartite agreement dated September 22, 1988, the assessee paid a further sum of Rs. 56,888 to its employees. The said sum was paid over and above the minimum bonus payable under the Payment of Bonus Act. The assessee claimed revenue deduction in respect of the said sum. The Income-tax Officer disallowed the claim on the ground that any payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bonus. Whatever might be the occasion or character of the bonus paid, whether it be under an agreement or as a customary bonus, if the amount paid was in excess of the amount payable under the Payment of Bonus Act, it could be claimed as deduction only if the conditions envisaged by section 36(1)(ii) of the Act were satisfied. This crucial aspect had not been borne in mind by the Tribunal when it allowed the payment of the amount in excess of the amount payable under the Payment of Bonus Act as a permissible deduction. " He has also relied on a circular of the Board, being Circular No. 414, dated 14th March, 1985, addressed to all the Commissioners of Income-tax by the Under Secretary to the Government of India which has been set out here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licability of the first proviso. In other words, his contention is that such payment is outside the purview of the Bonus Act and, accordingly, section 37(1) of the Income-tax Act, 1961, does not apply. We have considered the contentions raised before us. It is no doubt true that, in the bipartite settlement, it was, inter alia, recorded as follows : " The workers demanded payment of bonus at higher rate for the accounting year 1982-83. After bipartite discussion held between the management of Arcuttipore Tea Estate and the Began Panchaets this the 22nd day of September, 1983, it has been settled and agreed that the bonus for the accounting year 1982-83 will be paid to the workers at 11% of the wages/salaries earned by the eligible emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure laid out wholly and exclusively for the purposes of the appellant's business. The appellant in the present case arrived at a settlement for payment of ex gratia bonus in the interest of harmonious relations with the workers and such payments had been customary in the case of all tea gardens. In the circumstances, it could not be denied that the payment had been made by the appellant in the interests of and for the better management of the business." The decision of the Kerala High Court in the case of CIT v. Calicut Modern Spinning and Weaving Mills Ltd., [1990] 186 ITR 509 relates to the construction of the first proviso to section 36(1)(ii) of the Act with which we are not directly concerned in this case. In our view, the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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